ISS is at the forefront of fighting back against state anti-ESG laws. Several states have passed laws requiring proxy advisors to make certain “disclosures” when recommending voting against corporate boards. These laws are designed to stifle shareholder proposals, particularly those related to ESG. So far, ISS has seen success in the courtroom. The proxy advisor obtained preliminary injunctions in three previous lawsuits against similar laws in other states. Now ISS is taking the fight to Oklahoma, recently filing for a preliminary injunction in its suit to overturn Oklahoma’s ESG law. The court filing states:
“H.B. 4429 seeks to tilt the playing field in shareholder elections away from shareholders and toward corporate boards. If ISS advises its client to follow the board’s preferred outcome, the law has no effect. But if ISS advises its client to vote against the board’s wishes, the law compels ISS to issue disparaging and misleading statements about ISS’ business. Failure to comply is a felony, plus up to $10,000 in civil fines per violation. Oklahoma’s law is nearly identical to recent Kansas and Indiana laws and similar to a Texas law—each of which was preliminarily enjoined as likely unconstitutional as applied to ISS.”
Despite the number of injunctions ISS has secured up to this point, anti-ESG legislatures continue to replicate these disclosure laws. At some point, this issue is likely to elevate to the appellate courts and possibly the Supreme Court. For now, we’ll see if the trial court is willing to issue a preliminary injunction and, in the longer term, if it is willing to overturn Oklahoma’s ESG law.
Our members can learn more about anti-ESG here.
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