Enacted earlier this year and scheduled to take effect September 1, SB 2337 would impose new disclosure obligations on proxy advisory firms issuing recommendations regarding Texas-based public companies, including a requirement that any recommendation based in whole or in part on environmental, social, or governance (ESG) or other “nonfinancial” considerations be accompanied by a disclaimer that such advice subordinates shareholder financial interests to other objectives. But, on August 29, 2025, Judge Alan Albright of the U.S. District Court for the Western District of Texas entered preliminary injunctions in two related cases enjoining the State from enforcing Senate Bill 2337 against Institutional Shareholder Services (ISS) and Glass Lewis, the two firms that together account for the vast majority of proxy advisory services in the U.S. While the injunctions technically apply only to the named plaintiffs, their market dominance—an estimated 97 percent of proxy advisory services—renders the orders functionally dispositive of the law’s near-term enforceability.
