State v. Glass, Lewis & Co., LLC

State of Texas's consumer protection and deceptive trade practice lawsuit against the proxy advisor Glass, Lewis & Co. for allegedly prioritizing an ESG agenda over the fiscal interests of its clients.

State of Texas's consumer protection and deceptive trade practice lawsuit against the proxy advisor Glass, Lewis & Co. for allegedly prioritizing an ESG agenda over the fiscal interests of its clients.

Approximately eight weeks after filing a consumer protection and deceptive trade practice lawsuit against the proxy advisor Institutional Shareholder Services, Inc., Texas Attorney General Ken Paxton filed suit against proxy advisor Glass, Lewis & Co. (Glass, Lewis), alleging that the company “prioritizes its own environmental, social, and governance (‘ESG’) agenda over the fiscal well-being of its clients” in violation of the Texas Deceptive Trade Practices Act-Consumer Protection Act (DTPA). The complaint alleged that Glass, Lewis’s “Benchmark” analyses, which the complaint described as “supposedly the most objective and ideologically neutral of all the company’s sets of proxy voting guidelines,” in fact “incorporate financially imprudent ideologies without providing empirical support for their ESG-focused goals.” For example, with respect to climate change, the complaint alleged that the Benchmark guidelines reflect Glass, Lewis’s view of “climate risk as a material risk for all companies.” The complaint alleged that Glass, Lewis’s “ESG-focused initiatives are distinctly different from current financial market trends” and “stand in contrast to current political trends” such as the U.S.’s withdrawal from the Paris Agreement and the U.S. Environmental Protection Agency’s rescission of the endangerment finding for greenhouse gases. Texas asserted that Glass, Lewis violated the DTPA through its false, misleading, or deceptive acts and its failure to disclose that its ESG initiatives are not it its clients’ best financial interests. Texas requested a temporary restraining order, temporary injunction, permanent injunction, civil penalties, reasonable attorney fees, litigation expenses, and costs.