Texas Sued by ISS and Glass Lewis Over New Law Restricting ESG Investments

A recent lawsuit has been filed in a Texas federal court by two prominent proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, against the state of Texas. The lawsuit challenges a new law that restricts investments based on environmental, social, and governance (ESG) factors. The law, which was signed into effect by Texas Governor Greg Abbott in June, prohibits state pension funds from investing in companies that boycott energy companies. ISS and Glass Lewis argue that the law is unconstitutional and violates their First Amendment rights. The firms claim that the law forces them to choose between providing unbiased investment advice and risking legal repercussions. The lawsuit also alleges that the law is overly broad and vague, making it difficult for investment advisors to determine what constitutes a boycott of energy companies. The new law is part of a growing trend of states pushing back against ESG investing, which has become increasingly popular in recent years. ESG investing involves considering factors such as climate change, social justice, and corporate governance when making investment decisions. Proponents of ESG investing argue that it can help investors make more informed decisions and promote sustainable and responsible business practices. However, critics argue that ESG investing can be overly restrictive and limit investment opportunities. The lawsuit filed by ISS and Glass Lewis is the latest development in an ongoing debate over the role of ESG investing in the financial industry. The case has significant implications for the future of ESG investing and the ability of investment advisors to provide unbiased advice to their clients. ISS and Glass Lewis are seeking a declaratory judgment that the law is unconstitutional and an injunction to prevent its enforcement. The lawsuit is also seeking damages for any harm caused by the law. The state of Texas has not yet commented on the lawsuit, but it is likely to vigorously defend the law. The case is expected to be closely watched by the financial industry and could have far-reaching implications for ESG investing. In recent years, there has been a growing trend of investors considering ESG factors when making investment decisions. This trend has been driven in part by growing concerns about climate change and social justice. However, some critics have argued that ESG investing can be overly restrictive and limit investment opportunities. The lawsuit filed by ISS and Glass Lewis is the latest development in this ongoing debate. The case has significant implications for the future of ESG investing and the ability of investment advisors to provide unbiased advice to their clients. The financial industry is likely to be closely watching the case, which could have far-reaching implications for the way investments are made. The lawsuit is also likely to be closely watched by policymakers, who are increasingly grappling with the role of ESG investing in the financial industry. As the case moves forward, it is likely to be the subject of significant media attention and public debate. The outcome of the case is uncertain, but it is clear that it will have significant implications for the future of ESG investing. The case is a reminder that the financial industry is subject to a complex array of laws and regulations, and that investment advisors must navigate these laws carefully in order to provide unbiased advice to their clients. The lawsuit filed by ISS and Glass Lewis is a significant development in the ongoing debate over ESG investing, and its outcome is likely to be closely watched by the financial industry and policymakers alike.

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