Aug 29 (Reuters) - A federal judge on Friday blocked

Texas from enforcing a first-of-its-kind state law restricting

Glass Lewis and ISS, two of the best known proxy advisers, from

advising shareholders on diversity, environmental and governance

practices.

U.S. District Judge Alan Albright in Austin, Texas, issued

preliminary injunctions against the state's Republican Attorney

General Ken Paxton, after Glass Lewis and ISS said the law would

unconstitutionally force them to convey Texas' preferred views

on hot-button issues.

Paxton's office did not immediately respond to requests for

comment.

Signed in June by Republican Governor Greg Abbott, Senate

Bill 2237 targeted "non-financial" advice on diversity, equity

and inclusion (DEI) matters, and environmental, social and

governance (ESG) matters.

The law requires proxy advisers to tell clients that such

advice does not solely serve shareholders' financial interests,

and to provide financial analyses supporting the advice.

Glass Lewis and ISS sued on July 24, accusing Texas of

undermining their First Amendment right to advise clients,

including advice viewed as politically left-of-center.

The law was to take effect on September 1.

In seeking dismissals, Paxton said Glass Lewis and ISS

didn't show the law would harm client relationships.

He also said requiring factual "non-ideological" disclosures

wouldn't force proxy advisers to take political sides.

The law "applies equally to each party in the debate and

will be enforced accordingly," Paxton said.

Many companies have this year scaled back or ended support

for DEI programs. Republican President Donald Trump has made

eliminating those programs a high priority.

Glass Lewis said it has more than 1,300 institutional

investor clients, while ISS said it provided voting advice to

about 2,000 clients last year.

The cases are Glass Lewis & Co v Paxton, U.S. District

Court, Western District of Texas, No. 25-01153; and

Institutional Shareholder Services Inc v Paxton in the same

court, No. 25-01160.