Lincoln, Nebraska – Nebraska Attorney General Mike Hilgers has filed a lawsuit against Institutional Shareholder Services Inc. (ISS), accusing the powerful proxy advisory firm of misleading investors by promoting environmental, social, and governance policies while claiming to provide neutral and objective advice.
The lawsuit marks the latest legal challenge against ESG-related corporate practices and comes as several Republican-led states intensify efforts against firms they believe are pushing political ideology into investment and corporate governance decisions.
ISS, widely recognized as the world’s largest proxy advisory firm, advises institutional investors on how to vote during shareholder meetings involving public companies. According to the lawsuit, Nebraska officials claim the company secretly incorporated activist ESG priorities into its recommendations without properly informing clients.
“ISS sold Nebraska investors on the promise of objective, independent research. 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,” Attorney General Hilgers said.
He further argued that Nebraska investors were promised impartial guidance but instead received recommendations shaped by political and ideological goals.
“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,” Hilgers added.
Lawsuit Targets ESG Influence and Alleged Conflicts
According to the lawsuit, ISS worked alongside activist ESG organizations including Climate Action 100+, Ceres, and The Children’s Investment Fund to influence voting recommendations provided to investors.
State officials allege that the company failed to disclose the role those groups allegedly played in shaping recommendations, even while marketing its services as independent and objective.
The lawsuit also claims ISS quietly inserted ESG-focused standards into its primary benchmark recommendations, even for clients who were not specifically seeking ESG-oriented advice.
Nebraska officials further allege that ISS relied on ESG metrics without conducting proper financial analysis regarding how those policies would affect shareholder returns or company performance.
The lawsuit additionally points to ownership ties involving Deutsche Börse AG and General Atlantic, which officials describe as ESG-supporting entities that allegedly created undisclosed conflicts of interest.
Another major allegation centers around ISS voting recommendations tied to race and ethnicity policies between 2022 and early 2025.
According to the complaint, ISS recommended votes against certain corporate board members based on racial and ethnic criteria. Nebraska officials claim the policy was illegal and not fully disclosed to clients.
The lawsuit states that ISS later ended the practice following a 2025 Executive Order.
State officials also accused ISS of operating a consulting business that sold ESG-related advisory services to companies while simultaneously rating or evaluating those same firms. Nebraska argues that the arrangement represented another conflict of interest that was not properly disclosed.
Warren Buffett Example Highlighted in Lawsuit
The lawsuit also references Berkshire Hathaway Chairman Warren Buffett as an example of what Nebraska officials describe as ideological bias within ISS recommendations.
“ISS exerts outsized influence over corporate decisions in Nebraska and the United States, injecting anti-fiduciary activism into the performance of investments that everyday Nebraskans hold and often rely on for retirement and financial well-being,” Hilgers said.
“The fact that they could provide a disfavored recommendation as to seating Warren Buffett as a director at Berkshire Hathaway reflects how far they went astray in pursuit of their climate ideology,” he added.
The legal action follows growing national debate surrounding ESG investing and the role proxy advisory firms play in influencing corporate governance decisions.
Nebraska is not acting alone in the legal challenge. Florida previously filed a lawsuit against ISS in November, and Nebraska has now joined Iowa, West Virginia, and Texas in filing additional action against the company.
The lawsuit is also tied to the Multistate Proxy Advisor Coalition, a group of states coordinating efforts against what they describe as harmful proxy advisory practices linked to ESG activism.
The coalition includes Alabama, Alaska, Florida, Indiana, Iowa, Kansas, Kentucky, Nebraska, Missouri, Montana, South Carolina, South Dakota, Tennessee, Texas, Utah, and West Virginia.
State officials involved in the coalition argue that firms like ISS wield enormous influence over retirement funds, investment portfolios, and corporate board decisions that affect millions of Americans.
The lawsuit seeks to challenge what Nebraska officials describe as deceptive business practices and undisclosed ideological influence in the investment advisory industry.
