Republican attorneys general in conservative-led states are escalating a coordinated legal offensive against the diversity, equity and inclusion machinery embedded in major financial gatekeepers that influence corporate America.
According to Western Journal, Nebraska Attorney General Mike Hilgers, a Republican, has filed a sweeping lawsuit against Institutional Shareholder Services (ISS), one of the worlds most powerful proxy advisory firms, accusing it of illegally embedding DEI and broader Environmental, Social and Governance (ESG) priorities into its recommendations while neglecting its fiduciary duty to investors. Nebraskas action comes on the heels of a similar lawsuit filed in November by Republican Florida Attorney General James Uthmeier, signaling a growing red-state coalition determined to challenge what they view as ideological capture of corporate governance by left-wing activists.
ISS sold Nebraska investors on the promise of objective, independent research. What they were actually getting was advocacycoordinated with ESG activist organizations, untested against any financial standard, and driven by an ideological agenda that ISS never disclosed, Hilgers told the Daily Caller News Foundation.
Despite heavy criticism for promising objectivity and delivering ideology, ISS has refused to make any changes. But you cannot promise one thing and deliver another in Nebraska. We are taking action to put a stop to it.
The Nebraska complaint alleges that ISS systematically favors ESG frameworks regardless of whether those recommendations serve the financial interests of its clients, including pensioners and ordinary investors. Proxy advisory firms like ISS wield enormous influence by researching corporate governance issues and advising institutional shareholders on how to vote on matters ranging from executive compensation to pension management and board composition.
Missing is any financial analysis by ISS to determine whether the E&S advice given was in clients best financial interests even though advisers have a fiduciary duty to provide such advice and Nebraska consumers count on such advice to grow their pensions and other investment accounts, Hilgers lawsuit reads. ISS itself acknowledges that its fiduciary duty to clients obliges an adviser to provide advice that is in clients best interests.
The suit further contends that ISS has created a glaring conflict of interest by running what amounts to a parallel ESG consulting business, selling costly services to the same corporations it evaluates in its proxy research. While advising shareholders to vote according to ESG principles, ISS runs a parallel ESG consulting business, selling expensive services to the same companies it covers in its research reports. This is no different than a health inspector selling cleaning services on the side.
Nebraska characterizes ISS conduct as a classic bait-and-switch, arguing that investors were promised neutral analysis but instead received ideologically driven guidance crafted in concert with progressive activists. This is a deceptive trade practice and consumer protection action against Defendant ISS, a highly influential investment adviser, for promising shareholder clients, including those in Nebraska, one thing and delivering another, the suit reads.
Instead of providing its clients objective and impartial investment advice, as advertised, ISS has provided and continues to provide advice tainted by ISS own ESG ideological considerations untethered to its clients best financial interests and prepared in close coordination with ESG activists. The Nebraska filing mirrors and reinforces Floridas earlier case, which targets both ISS and rival proxy firm Glass Lewis for allegedly subordinating financial performance to ESG and DEI priorities in violation of their fiduciary obligations.
Republican Florida Attorney General James Uthmeiers November 2025 lawsuit against ISS and Glass Lewis alleges the same ideological violations of fiduciary duty. Florida also accuses the firms of violating state antitrust laws, noting that both companies are foreignowned and together dominate the proxy advisory market.
The Multistate Proxy Advisor Coalition now includes Alaska, Alabama, Florida, Indiana, Iowa, Kansas, Kentucky, Nebraska, Missouri, Montana, South Carolina, South Dakota, Tennessee, Texas, Utah and West Virginia. Defendants anticompetitive conduct has a substantial impact on Florida commerce. Because Defendants control around 97% of the market for proxy advice, Floridians were unable to switch to an alternative and suffered a pecuniary injury as a result, the Florida suit reads.
ISS and Glass Lewis have denied Floridas allegations that they operate as a de facto duopoly or that they have unlawfully imposed ESG and DEI standards on corporate America. Nonetheless, the lawsuits highlight a central concern of conservatives: that a small cluster of unelected, largely unaccountable firms are using their market power to push a progressive social agenda under the guise of responsible investing.
Nebraskas complaint goes further by explicitly accusing ISS of racial discrimination through its DEI policies and internal procedures.
Shareholder clients are also misled by ISS illegal consideration of race and ethnicity with respect to board of director candidates and a privately admitted lack of competence underlying certain of its ESG recommendations, the suit reads.
These actions have harmed Nebraska residents including by placing returns on their pensions and other investments behind promotion of ISS own social and political agenda. For conservatives, this charge underscores a broader critique of DEI: that it elevates identity politics and racial preferences over merit, equal treatment and financial prudence.
President Donald Trump, during his last administration, moved aggressively to rein in DEI and ESG mandates across multiple sectors, including the proxy advisory industry. President Trump issued multiple executive orders clamping down on DEI initiatives by ISS and Glass Lewis, universities, government and federal contractors, and his administration sought to withhold federal funding from universities that embedded DEI metrics into admissions and operations, triggering protracted legal fights with the higher-education establishment.
In particular, ISS has regularly used its research to pressure companies and their directors to advance the E&S components of ESG, namely climate change and diversity, equity and inclusion ideals, Nebraskas suit reads.
The filing then catalogs a series of ISS research products that Nebraska says reveal the firms ideological motivations rather than a neutral focus on shareholder value.
Among those, the complaint cites Adoption of a Climate Accountability policy, Adoption of a Say on Climate policy, Inclusion of a full-page Climate Awareness Scorecard in each report grading the company, Inclusion of a prominent QualityScore report card in each report grading the company on a variety of E&S components of ESG, and Adoption of a Racial and/or Ethnic Diversity policy.
ISS 2026 Benchmark Voting Guidelines go so far as to instruct investors to penalize companies that do not meet its gender quotas, explicitly recommending that shareholders vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the companys board in its gender diversity section.
ISS has spent years marketing itself as a neutral, objective proxy advisor, but it is actually peddling a political agenda. This new lawsuit from the Nebraska AG highlights how practices and advice provided by ISS and marketed as objective are not only ideologically driven, but potentially illegal, Consumers Research Executive Director Will Held told the DCNF.
Consumers Research has long warned that the proxy advisor duopoly represents one of the most dangerous and least accountable concentrations of corporate influence impacting consumers, Held added.
We commend the state AGs working to hold ISS accountable and will continue to support elected officials who are pushing back against the woke agenda.
As red-state coalitions expand their legal challenges, the outcome of these cases could determine whether powerful financial intermediaries remain free to embed progressive social engineering into corporate governance, or whether they will be forced back to a traditional standard that prioritizes fiduciary duty, shareholder returns and political neutrality over ESG and DEI activism.
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