An official review is to be undertaken into the influence of ESG advisers on board make-ups, company policies and fund manager investments.
The Financial Reporting Council will undertake the review and examine the power of ESG advisers in setting the agenda for AGMs and board representation.
Whether any flexibility is being allowed in recommendations of ESG and proxy advisers will also be looked at, the report in the Telegraph said.
A concern for the regulator is that proxy advisors often default to a poor governance conclusion without not enough credit given to explanations of non-compliance.
Companies also complain about not being able to access a proxy advisor to explain how its approach represents appropriate governance for its circumstances.
According to the report, the review will start in August and finish in March of next year.
News of the review follows a scathing attack on the rise of ‘cancel’ culture within global corporates by former HSBC manager Stuart Kirk, who resigned last week after being suspended earlier this year for questioning climate change and suggesting most of what’s out there is “bonkers (read more)".