Texas’ attempt to muzzle advice on hot-button issues like diversity and climate responsibility has hit a wall. A federal judge in Austin has temporarily blocked the state from enforcing a new law that would have restricted two of the world’s most influential proxy advisers—Glass Lewis and Institutional Shareholder Services (ISS)—from offering guidance on environmental, social, and governance (ESG) practices or diversity, equity, and inclusion (DEI) policies.
The law, signed in June by Governor Greg Abbott, was set to take effect September 1. It ordered proxy firms to slap disclaimers on their recommendations, warning investors that advice tied to DEI or ESG concerns wasn’t purely financial. It also required firms to provide financial justifications for such guidance—an unusual state intrusion into shareholder advisory work.
Judge Alan Albright wasn’t convinced. He granted preliminary injunctions, siding with Glass Lewis and ISS, who argued the law would coerce them into echoing the state’s political stance and violated their First Amendment rights.
Attorney General Ken Paxton, who championed the measure, argued the disclosures were factual and neutral, not ideological. He claimed the law treated all sides equally. The court didn’t buy it.
Glass Lewis and ISS hailed the ruling, with ISS emphasizing its commitment to “fact-based analysis” and independent advice. Together, the two firms serve thousands of major investors across the globe—Glass Lewis counts over 1,300 institutional clients, while ISS advised around 2,000 last year.
The case arrives as many U.S. companies are retreating from DEI commitments under political pressure, with national debates over ESG intensifying. The Biden-Trump divide looms large here: where corporate boards once embraced ESG, Republican leaders—especially Donald Trump—have vowed to dismantle such initiatives outright.
For now, Texas’ effort to silence proxy firms has been put on pause, with the legal fight far from over.
