Attorney General Paxton and Utah Attorney General Sean Reyes are leading a multistate coalition in sending a letter to International Shareholder Services, Inc. (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”), which are companies that provide proxy voting advice to shareholders and aid them in the process of voting at shareholder meetings.  

Given that ISS and Glass Lewis service certain States’ investment vehicles, their agreements typically require that only the economic value of investments be considered when advising clients. The companies are also governed by federal law that covers proxy advisors and requires that recommendations be free from false or misleading information. It appears that these companies may have potentially violated both federal law and their contractual duties.  

The letter notes several public positions that the companies have taken in support of achieving “net zero emissions” goals not just in principle, but also by recommending that clients vote a certain way–even when not in their financial best interest. This is compounded by evidence that the two companies may have potentially used misleading practices when advising clients on matters related to their climate agenda. ISS and Glass Lewis have also pledged to recommend votes on company directors based on certain racial, ethnic, or sex-based diversity factors, which could open companies up to substantial legal liability for unlawful discrimination.  

The coalition urges ISS and Glass Lewis to immediately halt their potentially illegal recommendations and demands they answer several questions regarding how far the companies have gone to advance their radical agenda.  

The letter states: “It has come to our attention that you have made several commitments that may interfere with your ability to honor your legal obligations. In this letter, we provide evidence of these potential breaches, specifically as they relate to your climate and diversity, equity, and inclusion priorities. We seek written assurance that you will cease such violations and commit to following the law.” 

To read the full letter, click here.