EXCLUSIVE: Texas AG Paxton Targets DEI, ESG in Shareholder Advisory Firm Lawsuit

• July 29, 2026

Texas Attorney General Ken Paxton speaks outside the U.S. Supreme Court on November 01, 2021 in Washington, DC. On Monday, the Supreme Court heard arguments in a challenge to the controversial Texas abortion law which bans abortions after 6 weeks. (Photo by Drew Angerer/Getty Images)

Texas Attorney General Ken Paxton. (Drew Angerer/Getty Images)

Texas Attorney General Ken Paxton brought a lawsuit against one of the world’s largest investment advisers alleging it pushes an ESG agenda, an acronym for environment, social, and governance.

The lawsuit names the San Francisco-based Glass Lewis, a firm that advises more than 1,300 investment managers, and says its clients manage $40 trillion across 100 global markets.

The lawsuit claims Glass Lewis made false representations and violated the Texas Deceptive Trade Practices Act, which went into effect last year and targets “non-financial” advice on ESG and diversity, equity and inclusion (DEI) matters. After the law passed, Glass Lewis sued Texas, claiming the law violated its First Amendment rights. Glass Lewis was joined in the lawsuit by Institutional Shareholder Services, also known as ISS.

The Paxton lawsuit argues Glass Lewis’s advertising is deceptive and fails to inform clients of its ESG priorities.

“Instead of providing objective and impartial investment advice, as advertised, Glass Lewis provides advice influenced by its own Environmental, Social, and Governance (‘ESG’) ideological considerations, apart from its clients’ best financial interests,” says the complaint filed in Texas District Court for Collin County.

The company describes itself as providing “independent corporate governance research, data-driven insights, and innovative stewardship and proxy voting solutions.” Proxy voting is when representatives vote on behalf of shareholders at annual corporate shareholder meetings. The company notes that its proxy voting representatives attend more than 30,000 shareholder meetings each year.

The proxy voting guidelines assert that companies “face significant financial, legal and reputational risks resulting from poor environmental and social practices,” according to the lawsuit.

The Paxton complaint further notes the guidelines “call for every board to establish a ‘nominating and governance committee’ that is ‘reasonably diverse on the basis of age, race, gender, and ethnicity,’” the complaint continues.

“Glass Lewis’s actions resemble those of an ESG activist forcing companies to comply with rules that governments will not otherwise adopt and that instead align with Glass Lewis’s own views on society’s environmental and social needs,” the lawsuit says.

Glass Lewis did not immediately respond to inquiries for this story, but the company has defended itself in the past against charges of heavily emphasizing ESG and DEI concerns.

In July 2023, the company responded to criticism from a group of Republican state treasurers, stating that its “benchmark policy considers environmental and social issues,” and adding, “That policy–like the proxy voting policies of many institutional investors–recognizes that how companies manage the risks and opportunities associated with climate change, as well as the composition of their board and workforce, can be material issues.”

It added, “our clients have a broad range of views,” and that it offers a “menu of voting options.”

“For example, Glass Lewis has a Climate Policy for investors focused on mitigating risks associated with climate change, a Catholic Policy that reflects the unique fiduciary responsibility of Catholic institutions, and a Governance-Focused Policy that is designed for our clients that are skeptical of the materiality of environmental and social considerations,” the company’s July 2023 statement said in response to the state treasurers.

Glass Lewis has spent years prioritizing ESG policies, DEI quotas, and climate activism while claiming to serve investors’ financial interests, said Will Hild, executive director of Consumers’ Research, an organization opposed to ESG policies.

“This deception is not just financially reckless but also illegal and must be met with consequences,” Hild told the Daily Signal. “That is exactly why Consumers’ Research has supported Texas’s new law, which ensures proxy advisory firms Glass Lewis and ISS can no longer operate in the dark and must disclose when their advice to investors is not based solely on financial interest.”

Paxton is the state’s Republican nominee for U.S. Senate. He is facing Democrat state Rep. James Talarico in the November election.

Fred Lucas | Senior Investigative Reporter

Fred Lucas is senior investigative reporter for the Daily Signal. He is the author of “The Myth of Voter Suppression: The Left’s Assault on Clean Elections.”

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