Four Republican state attorneys general filed lawsuits on May 20, 2026, against Institutional Shareholder Services (ISS), accusing the proxy advisory firm of violating state consumer protection laws by failing to disclose that its voting recommendations prioritize environmental, social, and governance (ESG) policies over clients' financial interests.
Texas Attorney General Ken Paxton (R), Nebraska Attorney General Mike Hilgers (R), Iowa Attorney General Brenna Bird (R), and West Virginia Attorney General Patrick Morrisey (R) filed separate complaints in their respective states. The lawsuits claim ISS advertised its proxy voting recommendations as independent and objective while coordinating with climate activist groups and incorporating ESG mandates into its benchmark voting guidelines without adequate disclosure to clients.
According to a September 2025 Congressional Research Service report, ISS is one of two firms that control more than 90% of the proxy advisory market. The company provides voting recommendations to institutional investors on shareholder proposals at publicly traded companies.
The lawsuits allege ISS violated state consumer protection laws by misrepresenting the nature of its services. The Texas complaint, filed under the Texas Deceptive Trade Practices Act, seeks civil penalties of up to $10,000 per violation and a court order requiring ISS to disclose its focus on ESG initiatives to clients.
The complaints cite ISS's Climate Accountability policy, which recommends voting against directors at companies the firm determines have not taken sufficient steps to address climate risks. The lawsuits also reference ISS's ownership structure, noting that its majority owner Deutsche Börse joined the Net Zero Financial Service Providers Alliance in 2022, committing to achieve net zero greenhouse gas emissions by 2050. The complaints allege ISS failed to disclose these affiliations and its membership in the Interfaith Center on Corporate Responsibility, an organization focused on ESG advocacy.
Paxton said, "ISS has enormous influence over how billions of dollars are invested and managed across this country, and they have abused that influence in order to push woke ideology."
An ISS representative said, “ISS’ job is to provide sophisticated institutional investor clients with independent, timely, and expert research and vote recommendations based on the proxy voting policies the clients have selected or customized based on their determination of the best interests of the beneficiaries they serve.”
ISS and Glass Lewis have faced scrutiny from Republican officials over their proxy voting guidelines. Paxton announced an investigation into both firms in September 2025. Glass Lewis and ISS filed separate lawsuits in 2025 and 2026 challenging state laws in Texas, Indiana, and Kansas that require proxy advisors to disclose when their recommendations differ from management positions or are based on non-financial factors.
President Donald Trump (R) issued an executive order on Dec. 11, 2025, directing the Securities and Exchange Commission to expand oversight of proxy advisory firms regarding diversity, equity, and inclusion and ESG policies.
Ballotpedia tracks support for and opposition to the environmental, social, and corporate governance (ESG) investing movement. To learn more about arguments for, against, and about ESG, click here. For more information on reform proposals related to ESG policy, click here.