Republican attorneys general are intensifying a legal offensive against diversity, equity and inclusion (DEI) initiatives and environmental, social and governance (ESG) investing practices inside major American corporations, with Nebraska becoming the latest state to sue one of the country’s most powerful proxy advisory firms.
Nebraska Attorney General Mike Hilgers announced Wednesday that the state filed a lawsuit against Institutional Shareholder Services (ISS), accusing the firm of deceptively pushing ideological ESG and DEI agendas while claiming to provide objective financial guidance to investors.
The lawsuit alleges ISS violated its fiduciary duty to investors by prioritizing climate activism and diversity policies over maximizing financial returns for clients, including pension holders and retirement investors in Nebraska.
“ISS sold Nebraska investors on the promise of objective, independent research,” Hilgers told the Daily Caller News Foundation. “What they were actually getting was advocacy — coordinated with ESG activist organizations, untested against any financial standard, and driven by an ideological agenda that ISS never disclosed.”
Hilgers added that despite criticism over allegedly injecting politics into shareholder guidance, ISS “refused to make any changes.”
Proxy advisory firms like ISS wield enormous influence in corporate America by advising shareholders on how to vote on executive compensation, board elections, climate policies and other governance matters.
Nebraska’s lawsuit accuses ISS of using that influence to pressure companies into adopting progressive ESG and DEI policies regardless of whether those policies benefit investors financially.
“Missing is any financial analysis by ISS to determine whether the E&S advice given was in clients’ best financial interests,” the lawsuit states, despite the firm’s fiduciary obligation to provide advice aligned with investor interests.
The complaint also alleges ISS operated with a major conflict of interest by simultaneously advising investors while selling ESG consulting services to corporations seeking favorable evaluations.
“This is no different than a health inspector selling cleaning services on the side,” the lawsuit argues.
Nebraska further accuses ISS of embedding racial and gender preferences into corporate governance recommendations through DEI policies.
Among the examples cited in the filing are ISS voting guidelines recommending shareholders vote against directors at companies with no women on their boards.
The legal battle is part of a broader multistate Republican effort targeting ESG and DEI influence inside finance and corporate governance.
Florida previously filed a similar lawsuit in November 2025 against both ISS and Glass Lewis, another dominant proxy advisory firm, alleging the companies illegally coordinated ESG activism while controlling roughly 97% of the proxy advisory market.
The coalition backing the anti-ESG effort now reportedly includes Alaska, Alabama, Florida, Indiana, Iowa, Kansas, Kentucky, Nebraska, Missouri, Montana, South Carolina, South Dakota, Tennessee, Texas, Utah and West Virginia.
Republican officials argue the lawsuits are necessary to prevent politically motivated activism from overriding shareholder interests and distorting the free market.
The lawsuits also come amid a much larger political crackdown on DEI initiatives under the Trump Administration.
Trump has issued multiple executive orders targeting DEI programs within universities, federal contractors and major institutions, while also attempting to block federal funding for schools using race-based admissions or DEI metrics.
Critics of ESG and DEI increasingly argue that corporate America has shifted away from neutral business operations toward ideological activism, particularly on issues involving race, climate policy and social justice.
“ISS has spent years marketing itself as a neutral, objective proxy advisor, but it is actually peddling a political agenda,” Consumers’ Research Executive Director Will Hild told the DCNF.
The escalating legal battles reflect a broader realignment in American politics and business, as Republican-led states attempt to counter progressive ideological dominance inside corporate institutions.
Whether the lawsuits ultimately succeed will have major implications for the future of ESG investing, shareholder activism and the role corporations play in shaping social and political policy debates in the United States.
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