As You Sow Responds to Court Decision on SB 2337: A Step Toward Protecting Shareholder Rights, But the Fight Continues

FOR IMMEDIATE RELEASE  

MEDIA CONTACT: Ryon Harms, [email protected], (310) 730-9407  

WACO, TX– August 29, 2025 — Today’s ruling from the U.S. District Court in Waco marks a partial but important victory in the battle to preserve investor freedom and protect the use of environmental, social, and governance (ESG) factors in financial decision-making. 

Judge Alan D. Albright granted a preliminary injunction preventing Texas Attorney General Ken Paxton from enforcing SB 2337 against Institutional Shareholder Services (ISS) and Glass Lewis, two of the largest proxy advisory firms in the U.S. The ruling confirms that ISS and Glass Lewis have legal standing and meet the standard for injunctive relief—but the ruling only applies to ISS and Glass Lewis, leaving the broader law intact for now. 

“This decision affirms that Texas cannot silence financial firms simply because they provide investors with information on climate and governance risk,” said Danielle Fugere, President of As You Sow. “It’s a critical step toward restoring common sense and constitutional protections to shareholder voting.” 

“Let’s be clear—this ruling is a win, but the danger isn’t over,” said Andrew Behar, CEO of As You Sow. “SB 2337 is an attempt to remove shareholder oversight of the board of directors – a critical factor in risk mitigation for companies. If this law becomes the national model, it will increase investor risk and chill data-driven analysis that helps companies to be competitive in a global market.” 

Why This Matters 

SB 2337, which takes effect September 1, targets firms like ISS and Glass Lewis by: 

·       Requiring disclosures when voting advice is based on ESG or other “nonpecuniary” factors 

·       Compelling justification whenever recommendations differ from company management 

·       Subjecting firms to government intervention—even in private lawsuits 

These requirements violate the First Amendment by restricting speech and conflict with federal securities law, which encourages fiduciaries to consider all material risks—including environmental ones. 

The preliminary injunction halts enforcement of the law only against ISS and Glass Lewis—leaving other actors involved in exercising shareholder voting rights vulnerable to enforcement under the law’s broad and vague provisions. 

A Law with National Consequences 

SB 2337 is part of a coordinated campaign to politicize investing by banning or stigmatizing ESG. Similar bills are advancing in more than a dozen states. If left unchallenged, these laws could: 

·       Reduce investor access to climate, pollution, and sustainability data 

·       Discourage companies from addressing long-term environmental risks 

·       Punish proxy advisors for integrating material ESG factors into their analysis 

·       Undermine shareholder democracy by forcing advisors to parrot corporate management 

“Had this law been enforced against ISS and Glass Lewis, it would have limited how shareholders vote their proxies and mitigate climate and social risks,” said Fugere. “That’s why this ruling is so essential—and why we must keep fighting for full protection.” 

As You Sow will continue working with partners across the financial, legal, and advocacy communities to challenge laws like SB 2337 and defend the right of shareholders to receive accurate, relevant, and unfiltered advice. 

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As You Sow is the nation’s leading shareholder representative, with a 30-year track record promoting environmental and social corporate responsibility. Its focus areas include climate change, ocean plastics, toxins in the food system, the Rights of Nature, racial justice, and workplace diversity. Click here to view As You Sow’s shareholder resolution tracker.