Further to our March 2022 report concerning ISS’s new “Board-Aligned” Policy, the Society sent this letter to ISS on April 7 expressing our serious concerns about the name of the policy, which, substantively, is not board- or management-aligned as implied. Rather, the Governance-related voting recommendations in the US voting guidelines (e.g., independent board chairs, board racial/ethnic diversity, and unequal voting rights) are nearly identical to the Governance-related voting recommendations in ISS’s Benchmark Policy, as shown by this redline, while being more deferential to the board on environmental and social matters, subject to ISS’s discretion about the adequacy of the company’s disclosure.
Both BlackRock and State Street offer the ISS “Board-Aligned” Policy, among other policies, to their clients in connection with their respective voting choice programs (see here and here, respectively). BlackRock’s literature on its Voting Choice program links to ISS’s Voting Policies webpage, whereas State Street describes ISS’s US Board-Aligned Policy as “Recommends votes in support of the management recommendation on all ballot items except in circumstances where there is a material governance failure or non-compliance with widely accepted governance practices.” In contrast, Vanguard’s retail voting choice pilot offers a true board-aligned policy that provides for votes in accordance with the board’s recommendations.
In the letter, , the Society requested ISS change the name of the policy to reflect the actual content. While ISS did not confirm receipt of our letter (as requested), we have knowledge that ISS received the letter. We will continue to seek a solution that will mitigate the harms that may be caused by the misnamed policy.