Lawsuit challenges state rule that punishes groups for including faith and ethics in investing advice
Case Caption: Interfaith Center on Corporate Responsibility et al. v. Ken Paxton, Case No. 1:25-cv-01803 (W.D. Tex. Nov. 10, 2025)
Link to Complaint: https://democracyforward.org/wp-content/uploads/2025/11/Interfaith-Center-on-Corporate-Responsibility-et-al-v.-PAXTON.pdf
[No public court opinion yet available]
Three religious and nonprofit investing groups are suing Texas Attorney General Ken Paxton over a new law that forces them to make statements they believe are false. The law punishes groups for including faith-based or ethical values in their investing advice and may result in fines of up to $10,000 for each time they do not comply.
We know this may seem like a dry and technical subject. But this case is about much more than economics or legal jargon. It affects the ability of religious and values-based organizations to speak freely when advising people who want their investments to match their beliefs.
The law in question, Senate Bill 2337, was passed in 2025. It tells anyone giving advice on how to vote on shareholder matters that if their guidance includes any reason that is not purely financial—such as environmental concerns, racial equity, or religious principles—they must say their advice is not in the financial interest of shareholders. If they do not include that warning, they face steep fines.
The three plaintiffs—the Interfaith Center on Corporate Responsibility, United Church Funds, and Ceres—say the law wrongly assumes that faith or social concerns are separate from financial interests. In fact, they argue that environmental risks, worker treatment, and ethical business practices are essential to long-term success. They believe the law forces them to say something they think is untrue.
They also say the law violates the First Amendment by compelling them to speak the state’s opinion instead of their own and that the rules are so vague that groups do not know when they are breaking them. They are asking the court to stop Texas from enforcing the law.
This lawsuit follows two similar cases from earlier this year. The same court temporarily blocked the law from being enforced against the country’s two largest proxy advisors, Glass Lewis and ISS. The new case expands that argument to include faith-based and nonprofit groups who say they are being swept up by the same law even though they operate differently.
A court hearing on the plaintiffs’ request for an injunction is expected soon. The outcome could affect whether religious and nonprofit groups will be able to continue giving advice without being forced to issue disclaimers they believe are misleading.
Why this case matters, even if you’re not a lawyer or investor
This case is about more than shareholder voting. It is about whether the government can force people to say things they disagree with just because their advice includes moral or religious beliefs.
Here’s why that matters:
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A church-affiliated investment group should not be required to say that its religious values hurt financial returns if it believes the opposite is true.
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Groups that care about clean water, worker safety, or equal treatment should not be labeled as misleading just for sharing those views.
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You should be able to get advice that matches your faith and values without the government stepping in to tell you what matters.
This case could set a precedent for whether states can regulate speech based on viewpoint. It also raises the question of whether the law treats faith-based groups fairly under the Constitution.
Thanks to https://religionclause.blogspot.com/2025/11/religious-based-proxy-advisors.html for highlighting this important case.
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AI Disclaimer
This article was prepared with the help of AI tools for research and drafting support. All information is based on publicly filed legal documents. This content does not constitute legal advice. For questions about your specific situation, contact a licensed attorney.
Tags:
SB 2337 lawsuit, compelled speech Texas, religious investment advice, nonprofit First Amendment case, shareholder proxy law
