The nation’s largest shareholder advisory firms are racing to prevent a Texas law from taking effect next month that they claim would make it difficult for them to share accurate information with clients about corporate climate risks.
The law would force Institutional Shareholder Services, Glass Lewis and other smaller firms to disclose to clients when they provide voting advice on environmental, social or governance issues that the legislation claims are not “solely in the financial interest of shareholders” — or face fines of $10,000 per violation.
S.B. 2337 was passed by the Republican-controlled Texas Legislature on June 2, signed into law by Gov. Greg Abbott (R) later that month and is set to come into force on Sept. 1.
Pensions, mutual funds and asset managers hire advisory firms to help them prepare for the annual shareholder meetings of the public companies whose stocks the investors hold on behalf of their clients. There are more than 50,000 annual meetings, each of which can include votes on more than a dozen shareholder resolutions and board candidates.
