Institutional Shareholder Services Inc. v. Paxton

In lawsuits brought by two proxy advisor firms, the federal district court for the Western District of Texas granted preliminary relief enjoining Texas Attorney General Ken Paxton from enforcing S.B. 2337, a law that requires that a proxy advisor disclose to its clients and the subject company and publish statements on its website if its advice is “not provided solely in the financial interest of the shareholders of a company.” This requirement applies to advice that is “wholly or partly based on, or otherwise takes into account, one or more nonfinancial factors,” including, among other factors, environmental, social, or governance (ESG) goals, factors, or investment principles and “a social credit or sustainability factor or score.” The law was scheduled to take effect on September 1. In a text order issued after an August 29, 2025 hearing, the court found that the plaintiff firms had standing and satisfied the standard for a preliminary injunction.

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