Texas Targets Proxy Advice Based on Nonfinancial Factors With SB 2337


On June 20, 2025, Texas Governor Greg Abbott signed into law Senate Bill 2337 (SB 2337), which imposes new regulations on proxy advisory firms — such as ISS and Glass Lewis — when providing voting recommendations and other proxy advisory services concerning Texas public companies. The new law, which takes effect on September 1, 2025, applies to proxy advisory services involving any public company that is incorporated in Texas, has its principal place of business in Texas, or has proposed redomiciling in Texas. SB 2337 requires proxy advisors to provide detailed disclosures when their recommendations are based, in whole or in part, on nonfinancial factors — including environmental, social or governance (ESG) principles or diversity, equity and inclusion (DEI) considerations — or when they diverge from management’s recommendation or provide conflicting advice across clients. Any violation of the new law constitutes a deceptive trade practice under the Texas Business & Commerce Code and is actionable by the company that is the subject of the recommendation, any of its shareholders, advisory clients, and the Texas Attorney General.

Scope and Applicability of SB 2337

SB 2337 will apply to “proxy advisory services” provided in connection with or in relation to any public company that:

SB 2337 defines “proxy advisory services” as: 

Disclosure Triggers for Nonfinancial Voting Recommendations

Under SB 2337, a proxy advisory service is subject to enhanced disclosure requirements if it:

Mandatory Disclosure Obligations for Proxy Advisors

If a proxy advisor provides a proxy advisory service that meets any of the foregoing qualifications, the proxy advisor must:

Notice Requirements for Conflicting Voting Recommendations

SB 2337 also includes enhanced notice requirements for a proxy advisor that recommends that one or more clients vote on a proposal in opposition to the recommendation of the company’s management or that one or more clients who have not expressly requested services for a nonfinancial purpose vote differently from one or more other clients on a proposal or director nominee. If so, the proxy advisor is required to:

Enforcement and Remedies

SB 2337 provides that any violation of its provisions is a deceptive trade practice under the Texas Business & Commerce Code, and names the recipient of the proxy advisory services, the company that is the subject of the proxy advisory services and any of the company’s shareholders as affected parties that are entitled to bring a claim for injunctive relief. The bill also authorizes the Texas Attorney General to intervene in such a claim. Additionally, the consumer protection division of the Attorney General’s office may pursue civil penalties for violations of SB 2337.

Legislative Context

SB 2337 is the latest in a series of pro-business corporate governance reforms, which we discussed in our two previous alerts concerning Senate Bills 29 and 1057 and Senate Bill 2411, aimed at positioning Texas as a jurisdiction of choice for public companies. By requiring proxy advisory firms to disclose when their voting recommendations are based on ESG, DEI or other nonfinancial factors, the Texas Legislature has reaffirmed its commitment to a business-first approach that prioritizes transparency and shareholder financial interests.


© 2025 Bracewell LLP
National Law Review, Volume XV, Number 174