Texas AG Launches Investigation Into Proxy Advisers Glass Lewis & ISS

Texas Attorney General Ken Paxton announced a probe into proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS), alleging they may have misled institutional investors and public companies.

The firms provide analysis and voting recommendations on shareholder proposals, board elections, executive compensation, and environmental or social resolutions. Paxton’s office issued civil investigative demands to determine whether the companies violated Texas consumer-protection laws, including disclosure requirements. Glass Lewis and ISS stated they comply with all applicable laws and provide advice to institutional investors. The investigation aligns with a broader Republican effort against ESG initiatives, with Texas at the forefront.

Texas has been a key player in pushing back against ESG (Environmental, Social, and Governance) influence in corporate decision-making. In August, a federal judge stepped in with a preliminary injunction, effectively halting the Republican-led state’s efforts to enforce a groundbreaking law that would prevent proxy advisory firms like Glass Lewis and ISS from offering recommendations to shareholders on ESG-related issues. This move is part of a broader push to limit the role of ESG factors in business decisions, especially in state-run investments.