Texas Drops Court Bids to Revive ESG Curbs for Proxy Firms

Texas Attorney General Ken Paxton on Monday abandoned legal attempts to restore a law which would have limited firms giving investors ESG-related voting guidance.

The US Court of Appeals for the Fifth Circuit is “highly unlikely” to rule on requests by Texas to end a hold on that law, SB 2337, before another court acts, the Republican attorney general said in filings withdrawing the state’s challenges.

Texas had challenged a judge’s August decision pausing the statute before it was set to take effect Sept. 1. That judge, Alan Albright of the US District Court for the Western District of Texas, set a trial for Feb. 2.

SB 2337 requires proxy advisory firms to report they use “nonfinancial factors” in creating recommendations related to environmental, social, and governance issues.

Glass, Lewis & Co. and Institutional Shareholder Services Inc. sued to toss the law in separate cases, saying it violated the First Amendment, among other claims. Paxton called the law “perfectly valid” in court filings.

The cases are Glass Lewis v. Paxton, 5th Cir., No. 25-50771, unopposed motion for voluntary dismissal filed 11/24/25 and Institutional Shareholder Services Inc. v. Paxton, 5th Cir., No. 25-50777, unopposed motion for voluntary dismissal filed 11/24/25.