Red state attorneys general are waging legal warfare against diversity, equity and inclusion policies lingering in big business.
Republican Nebraska Attorney General Mike Hilgers filed a lawsuit against proxy advisory firm Institutional Shareholder Services (ISS) Wednesday, alleging the firm illegally implemented DEI policies and flouted its fiduciary duty to pursue ideological ends. Other states are expected to join the lawsuit.
Nebraska’s action follows a Florida lawsuit in November alleging similar wrongdoing by ISS.
“ISS sold Nebraska investors on the promise of objective, independent research. What they were actually getting was advocacy—coordinated with [environmental, social and governance (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.”
Nebraska’s suit accuses the firm of favoring ESG frameworks regardless of their clients’ financial interests. Proxy advisory firms conduct research and advise shareholders how they should vote on various corporate governance matters. This includes everything from setting executive salaries to pension management.
“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.’”
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.”
“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.”
Republican Florida Attorney General James Uthmeier’s 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. Both companies are foreign–owned. 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 denied Florida’s claims they acted as a duopoly or illegally employed ESG and DEI practices.
Nebraska also accuses ISS of racial discrimination via DEI policies and operating 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.”
President Donald Trump issued multiple executive orders clamping down on DEI initiatives by ISS and Glass Lewis, universities, government and federal contractors. The Trump administration also attempted to withhold funding from universities employing DEI metrics in admissions and operations, sparking lengthy legal battles.
“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,” Nebraska’s suit reads.
The filing goes on to list several research reports allegedly exemplifying ISS’ ideological motivations, including “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 explicitly recommends 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 company’s 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 Hild 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,” Hild 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.”
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