state of texas v. dei

By: Emily Hill, December 8, 2025

On July 24, 2025, Glass Lewis and ISS, two major companies that advise investors on how to vote in corporate elections, sued the State of Texas over a new law. This law would make it harder for them to give advice on topics like diversity, equity, inclusion (DEI) and environmental or social issues (ESG). Texas wanted these companies to add special warnings whenever they talked about anything the state considered “nonfinancial,” and they would have to prove how those recommendations made financial sense.

Glass Lewis and ISS argued that this violates their freedom of speech. They said the government can’t force them to label their own advice in a negative way or push them to talk about things only from the state’s point of view. They also said the law could scare companies away from giving honest advice about DEI and ESG topics, which many investors care about.

If the law had gone into effect, it might have changed how companies and investors make decisions. People might get less information about things like board diversity, worker treatment, climate impact, and other social issues. Companies could also feel less pressure to be responsible in these areas.

But at the end of August 2025, a federal judge stepped in and blocked Texas from enforcing the law, at least for now. The judge said the law likely violates the First Amendment and unfairly targets certain viewpoints. This means Glass Lewis and ISS can keep giving their usual advice without adding state-required warnings.

For investors, the judge’s decision means they can still get full, honest information about both financial and social issues. For companies, it means DEI and ESG topics won’t suddenly disappear from shareholder discussions. And for Texas, this lawsuit is a big test of how far states can go when trying to limit conversations about diversity and social responsibility in business.

In the end, this case is about more than just one law. It represents a bigger debate happening across the country about whether companies should care only about profits or also pay attention to fairness, sustainability, and how they impact people. The judge’s ruling is a temporary win for those who believe these topics matter, but the final decision in 2026 will shape how DEI and ESG are handled in the future — not just in Texas, but everywhere.