According to the Legislative Budget Board (LBB), the fiscal implications of SB 2337 are minimal at both the state and local levels. The bill is not expected to have a significant fiscal impact on the state budget. Although it establishes new disclosure requirements for proxy advisory services and grants companies access to information about certain shareholder voting recommendations, the state agencies involved are expected to implement these provisions using existing resources without requiring new appropriations.

Specifically, the agencies most likely to be affected—including the Texas State Securities Board and the Office of the Attorney General—can handle any oversight or compliance-related activities under their current operational capacity. This suggests the bill is designed in a way that avoids imposing administrative burdens requiring new funding or staffing increases.

Additionally, no significant fiscal impact is anticipated for local governments. Since the bill targets private-sector advisory firms and corporate shareholder communications, it does not create any direct obligations for local governmental entities. Therefore, SB 2337 achieves its regulatory goals without imposing measurable new costs on public agencies or the taxpayer-funded budget.

Texas Policy Research recommends that lawmakers vote YES on SB 2337 based on its alignment with key liberty principles—particularly those of transparency in free enterprise, personal responsibility, and protecting shareholder rights. The bill seeks to address growing concerns over the influence of proxy advisory firms, which play a powerful but largely unregulated role in corporate governance by issuing voting recommendations to shareholders. These firms, which dominate the market and are often foreign-owned, have increasingly used nonfinancial criteria, such as ESG and DEI metrics, when issuing advice. SB 2337 requires such advisory firms to clearly disclose when their recommendations are not based solely on financial interests, especially when they provide conflicting guidance to clients on the same vote.

The bill does not restrict the ability of proxy advisors to issue ESG-based recommendations. Rather, it ensures that shareholders, who often rely on these firms to fulfill fiduciary duties, are informed when advice may not align with financial return objectives. This disclosure-based framework strikes a balance: it respects the free market while increasing transparency and accountability. It reinforces personal responsibility by requiring proxy advisors to justify and clarify the basis of their recommendations, particularly when those recommendations may cause confusion or conflict.

From a limited government perspective, the committee substitute notably avoids creating a new regulatory agency or imposing excessive bureaucratic oversight. Instead, it leverages existing legal mechanisms under the Deceptive Trade Practices Act and Declaratory Judgments Act, allowing enforcement through civil courts or by the attorney general. This restrained approach to enforcement makes the bill more palatable from both a fiscal and liberty-oriented standpoint.

In sum, SB 2337 promotes informed decision-making by shareholders and reduces the potential for deceptive practices in the proxy advisory industry, without introducing heavy-handed regulation or undermining legitimate ideological investment strategies. It is a prudent and measured response to a real and growing concern in corporate governance.

• Individual Liberty: The bill supports individual liberty by empowering shareholders with clearer, more accurate information when casting votes on corporate matters. By requiring proxy advisory firms to disclose when their recommendations are based on nonfinancial criteria—such as ESG or DEI considerations, shareholders are better positioned to act in accordance with their own investment priorities and values. This enhances autonomy in shareholder decision-making and protects against misleading or ideologically driven guidance disguised as purely financial advice
• Personal Responsibility: The bill reinforces personal responsibility by holding proxy advisory firms accountable for the content and consistency of their advice. These firms are not banned from using ideological frameworks, but they must disclose when doing so. This ensures they are answerable for the impact of their recommendations, particularly if they conflict across clients or diverge from financial return objectives. This transparency encourages higher ethical standards and more thoughtful stewardship in the proxy advisory industry.
• Free Enterprise: The bill largely preserves market dynamics by avoiding direct restrictions on the business models or strategies of proxy firms. Instead, it enhances the functioning of the free market by improving the information environment in which economic actors operate. Investors and companies benefit from more informed engagement, helping to ensure that capital is allocated and corporate governance decisions are made on clear, disclosed terms. This supports market efficiency and investor trust without introducing anti-competitive constraints.
• Private Property Rights: Shareholders, as part-owners of corporations, have a vested interest in protecting the value of their investments. By requiring proxy advisors to clarify whether their advice is financially focused or ideologically driven, the bill helps protect shareholders’ control over their equity interests. When shareholders vote on matters like mergers, board elections, or compensation, knowing the rationale behind recommendations helps them safeguard their property rights more effectively.
• Limited Government: Although the bill introduces new disclosure mandates, it avoids creating new bureaucracies or heavy-handed regulations. It relies on existing civil enforcement mechanisms through the Deceptive Trade Practices Act and declaratory or injunctive relief under state law. This approach reflects a respect for limited government: it addresses the potential for deceptive practices while refraining from overregulation.

• HB 4079 (Same As)