Institutional Shareholder Services Inc. v. Paxton

A proxy advisor (Institutional Shareholder Services Inc. (ISS)) filed a lawsuit in the federal district court for the Western District of Texas challenging a Texas law (S.B. 2337) 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.” ISS asserted that the law violated the First Amendment and was void for vagueness, violated the Contracts Clause, and was preempted by the federal Investment Advisers Act of 1940 and Securities and Exchange Commission regulations. Another proxy advisor (Glass, Lewis & Co., LLC (Glass Lewis)) also filed a <a href="https://climatecasechart.com/?case=glass-lewis-co-v-paxton">lawsuit</a> challenging the law.