Last week, Texas v. BlackRock (E.D. Tex.), the first antitrust case challenging climate collaborations by financial institutions, reached an initial resolution. Texas Attorney General (“AG”) Ken Paxton announced that one of three institutional-investor defendants, Vanguard, had settled. As part of the settlement, Vanguard pledged not to “direct” its portfolio companies’ business strategies, threaten withdrawal of its holdings unless portfolio companies “agree to act…in some manner,” nominate portfolio directors, or promote shareholder proposals. AG Paxton boasted of having achieved “one of the most significant enforcement actions ever taken against coordinated ESG-driven market manipulation.” Yet these settlement provisions largely duck the question of whether Vanguard’s climate-alliance participation presented meaningful grounds for claiming antitrust harm. On its own, Vanguard’s settlement does little to clarify how ESG or sustainability goals may bring liability for businesses.
More broadly, however, this settlement provides a useful moment to step back and assess the impact of state-level initiatives targeting environmental, social, and governance (“ESG”) considerations in asset and corporate management. State legislation seeking to thwart ESG business and investment practices has largely failed in court, as plaintiffs have successfully advanced constitutional challenges. Yet copycat legislation continues to advance in multiple statehouses. And state AGs continue to launch investigations of climate alliances and sustainability initiatives premised on weak antitrust or consumer-protection theories, in an apparent effort to intimidate players most likely to catalyze a clean-energy transition.
Defeat of Texas’s SB13 Underscores Vulnerability of State Laws Designed to Punish “Energy Boycotts”
In American Sustainable Business Council v. Hegar (W.D. Tex.) (“ASBC”), a corporate alliance challenged Texas’s 2021 Senate Bill 13 (“SB 13”), the first law passed by a state that prohibited its entities (including public pension funds) from investing in, or contracting with, firms that “boycott fossil-fuel companies.” As part of SB 13’s implementation, the Texas Comptroller developed a list of 15 firms and more than 300 investment funds purportedly participating in this boycott. Vendors pursuing state contracts over $100,000 were required to verify that they do not “boycott energy companies.”
In February, the court granted plaintiffs’ motion for partial summary judgment, enjoining SB 13’s further enforcement. Judge Alan Albright, a Trump appointee, found First Amendment violations because SB 13 was facially overbroad (curtailing an unnecessarily wide range of conduct, including protected forms of speech), and Fourteenth Amendment violations because SB 13 was impermissibly vague (leaving parties unable to reasonably determine the scope of covered conduct). On both counts, Judge Albright cited SB 13’s stated enforcement authority against “any action…intended to penalize, inflict economic harm on, or limit commercial relations with” fossil-fuel producers. The court found that this provision could chill clearly protected activities such as “speaking about the risks posed by fossil fuels, advocating against reliance on fossil fuels, and associating with like-minded organizations.” The court further found that SB 13 already had prompted discriminatory enforcement, because the Comptroller dismissed without explanation some listed firms’ assertions that their purported boycotting actions were “driven by ordinary business purposes” (which SB 13 ostensibly permitted). Texas has filed a notice of appeal with the Fifth Circuit.
In perhaps his most far-reaching formulation, Judge Albright declared it “difficult to imagine what sort of conduct is both not an ‘ordinary business purpose’ and not an expression protected by the First Amendment.” Since a boycott not motivated by financial gain typically receives default treatment as protected speech or conduct, and since these bills exempt routine financially motivated decisions (“ordinary business activity” or “reasonable business purpose”) from coverage, precisely what constitutional function does such a law serve? Here, the court implicitly called into question the constitutionality of comparable bills passed by at least five additional states: Alabama’s SB 261 (2023), Arkansas’s HB 1307 (2023), Idaho’s SB 1291 (2024), Kentucky’s SB 205 (2022), and Utah’s SB 97 (2023). Each of these laws, like Texas’s SB 13, appears to be modeled on the American Legislative Exchange Council’s (“ALEC’s”) 2021 draft “Energy Discrimination Elimination Act.” Neither that draft, nor the bills it inspired, explain how they might combat energy boycotts without intrusive intervention into corporations’ business judgment, or infringement of constitutionally protected speech.
Additional laws restricting states’ business engagements with ESG-associated firms, and arguably relying on similarly vague or overbroad statutory language, include: Indiana’s HB 1008 (2023), Kansas’s HB 2100 (2023), Louisiana’s HCR 70 (2023), Montana’s HB 228 (2023) (containing facially contradictory definitions of whether ESG considerations categorically amount to “non-pecuniary” decision-making), Tennessee’s SB 955 (2023) (especially vague in prohibiting ESG considerations that “may not be material” to a financial analysis), and West Virginia’s SB 262 (2022).
Prior to the ASBC decision, an Oklahoma court in Don Keenan v. Oklahoma had struck down a similar statute targeting ESG business and investment practices, on free-speech and anti-discrimination grounds. But this ruling focused on protections found in Oklahoma’s state constitution, limiting its application nationwide. While the ASBC decision, as a district-court ruling, is not controlling precedent in other districts, its forceful decision on federal constitutional protections offers persuasive authority for challenging comparable “energy boycott” laws outside of Texas.
Defeat of Texas’s SB 2337 Has Not Stopped Proliferating Efforts to Target Proxy Advisors
Whereas SB 13 sought to constrain state entities’ investment and procurement decisions, Texas’s SB 2337, signed into law in June of 2025, directly imposes speech requirements on private proxy advisors, based on the particular advice they offer. While this law was partially enjoined by the court within months of its passage, copycat bills have passed in at least eleven other states.
According to SB 2337, advisors who factor ESG or sustainability concerns into a proxy recommendation (whether as part of a financial risk-return calculation on an advisee’s behalf, or in pursuit of collateral benefits for a third party) must disclose and explain their weighing of such factors to clients and to the relevant corporation, and must declare that “the advice subordinates the financial interests of shareholders to other objectives.” Advisors who recommend a position inconsistent with corporate management’s must similarly detail the financial analysis supporting this recommendation. Yet recommendations that prioritize religious or libertarian social values, or that conform to corporate preferences, face no such obligations.
SB 2337 was challenged by two major proxy advisors, Glass Lewis and Institutional Shareholder Services (“ISS”), who assert that, as applied, SB 2337 violates their First Amendment rights through content/viewpoint discrimination and compulsory non-commercial speech. They also argue that SB 2337 violates their Fourteenth Amendment rights through unconstitutionally vague prohibitions, and is preempted by the Employee Retirement Income Security Act of 1974 (ERISA) and/or the Investment Advisers Act of 1940.
The challenges brought by Glass Lewis and ISS were consolidated in Glass Lewis v. Paxton (W.D. Tex.). In August of 2025, several days before SB 2337’s implementation deadline, Judge Albright, presiding over this case as well as the SB 13 suit discussed above, issued a preliminary injunction that prohibits state enforcement against Glass Lewis or ISS, but does not bar enforcement actions by private plaintiffs, nor state enforcement against other potential defendants. Though Judge Albright has yet to issue a legal explanation for the injunction, his statements at the August oral argument suggest he considers SB 2337 at the very least to violate the First Amendment. Texas filed and then abandoned a Fifth Circuit appeal of the injunction, and a bench trial is anticipated.
A coalition of nonprofit organizations has sued as well, in Interfaith Center on Corporate Responsibility v. Paxton (W.D. Tex.) (“Interfaith Center”), arguing that SB 2337 fails on First and Fourteenth Amendment grounds. Their facial challenge would prohibit state enforcement against any organization. These plaintiffs do not solely provide “proxy advisory services,” but argue that SB 2337 defines this term so vaguely (covering, for instance, any party that receives “compensation” for “proxy statement research and analysis”) that the law chills their protected speech. Judge Albright, presiding here also, denied these plaintiffs’ motion to consolidate their complaint with those of Glass Lewis and ISS.
Even as these cases proceed, and with SB 2337 enjoined as to the two firms that comprise approximately 98% of the proxy-services market, copycat legislation has proliferated with notable speed, largely based on a model “Proxy Advisor Transparency Act” issued by the advocacy organization Consumers’ Research. In just the first two months of 2026, pending state legislation that would single out proxy advisors who consider ESG factors and/or recommend against management preferences includes: Arizona’s SB 1503, Indiana’s HB 1273, Iowa’s HF 2196, Kansas’s SB 375, Nebraska’s LB 728, Mississippi’s SB 2676, Oklahoma’s HB 4429, South Carolina’s H 4985, West Virginia’s SB 417, and Wisconsin’s SB 879. Kentucky’s SB 183 was also passed last year, over Governor Andy Beshear’s veto. Here again, a determination of SB 2337’s unconstitutionality, via either the Glass Lewis or Interfaith Center challenge, would provide persuasive legal authority against such statutes nationwide.
State AGs Continue to Attack Reasonable Climate Risk Mitigation
As legal vulnerabilities have emerged for states’ anti-ESG legislation, state AGs have issued threat letters and announced investigations invoking novel readings of traditional consumer-protection and antitrust laws. For example, in January 2025, eleven state AGs (led by AG Paxton) sent a letter to financial institutions, stressing that “radical environmental policies” may violate their legal, contractual, or fiduciary obligations, and inviting responses to help clarify “whether…enforcement action is appropriate.” A 23-state letter (led by Iowa AG Brenna Bird) sent in August 2025 to the Science Based Targets initiative (SBTi) requested wide-ranging access to internal documents and client communications, while expressing “grave concerns” that this nonprofit emissions-abatement advisor and the financial institutions committed to its standards risk violating antitrust or consumer-protection laws. A five-state letter (led by Florida AG James Uthmeier) sent in October 2025 to the U.S. Plastics Pact, Consumer Goods Forum, and Green Blue Institute cited “concerns about collusion and market manipulation”—and a follow-up 10-state letter notified nearly 80 corporations associated with these plastic initiatives that continued participation may expose them to liability. A sixteen-state letter (led by Montana AG Austin Knudson) also sent in October to Amazon, Google, Meta, and Microsoft expressed “collective concerns” about burgeoning European Union emissions-disclosure regimes, asked “American companies like yours [not] to follow European ESG…mandates…unlawful in America,” and requested a response “explaining in detail the steps…[you have] taken to reject the EU’s anti-American-values CSRD and CSDDD directives.” And a six-state letter (led by Florida AG Uthmeier) sent to Ceres in January 2026 expressed concerns that the climate-transition advocate may have acted “as a central coordinator for efforts designed to…steer capital away from certain fossil-fuel investments.” Equivalent executive-branch coalitions have also arisen at the level of state financial officers, with comptrollers and auditors targeting ESG or sustainability initiatives as suspect “international political agendas.”
Individual AG actions have similarly targeted particular firms. AG Uthmeier has issued subpoenas to CDP and SBTi regarding their climate-disclosure services, noting “what appears to be a profit-driven feedback loop” potentially violating consumer-protection or antitrust laws. Since March, AG Uthmeier also has undertaken an investigation and subsequent court filing on whether ESG considerations by Glass Lewis and ISS have misled clients expecting a “sound, apolitical investment strategy.” In September, AG Paxton announced his own investigation of Glass Lewis and ISS for “potentially misleading…recommendations that advance radical political agendas”—underscoring proxy advisors’ current status as an attractive target, as both anti-ESG and pro-corporate voices demand a curtailment of shareholder activism.
Not to be outdone, President Trump recently issued an Executive Order directing the Securities and Exchange Commission, the Federal Trade Commission, and the Labor Department to review “foreign-owned” proxy advisors’ conduct for consumer-protection harms, antitrust implications, and/or fiduciary violations. So even as recent judicial developments should give firms and organizations increased confidence that reasonable ESG considerations can prevail in court, blustering accusations and investigations look likely to create headwinds so long as climate skeptics hold executive offices. In the meantime, climate risk for corporations, investors, and society only compounds.
Cynthia Hanawalt is the Director of Climate and Business Law at the Sabin Center for Climate Change Law.
Andy Fitch is a Climate and Business Law Fellow at the Sabin Center for Climate Change Law at Columbia Law School.
