Sept 16 (Reuters) - Texas Attorney General Ken Paxton on

Tuesday launched an investigation into proxy advisers Glass

Lewis and Institutional Shareholder Services (ISS), alleging

they may have misled institutional investors and public

companies.

Glass Lewis and ISS, the two largest U.S. proxy advisory

firms, analyze shareholder proposals and corporate governance

issues and issue voting recommendations to institutional

investors ahead of annual meetings.

Their guidance can influence votes on board elections,

executive compensation and environmental or social resolutions.

Glass Lewis and ISS did not immediately respond to Reuters'

request for comment.

"Proxy advisors play a massive role in shaping corporate

governance decisions in our country, affecting tens of billions

of dollars," Paxton said in a statement.

He said his office issued civil investigative demands to

both firms to determine whether they violated Texas

consumer-protection laws, including rules on disclosing material

facts.

REPUBLICAN PUSH AGAINST ESG

The investigation comes amid a

broader Republican campaign

against ESG, with critics arguing companies should

prioritize shareholder returns over social or environmental

goals.

Several companies this year have scaled back or ended

Diversity, Equity, and Inclusion programs with President Donald

Trump having made eliminating such programs a priority.

Texas has been at the forefront of this pushback. In

August, a federal judge issued a preliminary injunction blocking

the Republican-run state from enforcing a first-of-its-kind

state law restricting Glass Lewis and ISS from advising

shareholders on ESG practices.

Both firms have long drawn criticism for their influential

voting recommendations, traditionally from corporate executives,

but their guidance remains widely used by institutional

investors.

Supporters say the advisers help investors navigate complex

governance issues, distill lengthy filings, and increase

accountability on corporate boards.