Decrying DEI: Texas’ Paxton Brands 100+ State Laws as “Unconstitutional”

23 January 2025

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By Jack Grogan-Fenn

Texas’ Attorney General Ken Paxton has declared that diversity, equity and inclusion (DEI) policies, programmes and more than 100 “woke” state laws are “unconstitutional”.

The legal opinion issued this week has set its sights on DEI programs in schools and state and local governments across Texas, as well as at other public institutions. “It’s imperative that all private-sector employers, schools, and state and local government entities – based on this legal opinion – immediately abolish any DEI, affirmative action, or unconstitutional discrimination programs under their authority,” said Paxton.

The opinion from Paxton – a renowned ESG and DEI critic – also noted that private companies taking part in “woke DEI practices” are “exposing themselves to significant legal liability under state and federal law”.

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Key Client Takeaways:

Paxton Declares DEI “Unconstitutional”

• Texas Attorney General Ken Paxton issued a legal opinion labelling more than 100 state DEI-related laws and programmes as “unconstitutional” and urging their immediate dismantling. Paxton has targeted DEI initiatives at both public institutions and private companies.

Corporate Responses Diverge Significantly

• Some companies such as Costco and Apple have defended DEI policies, while others — including Rolls Royce, Disney, Meta, and Target — have pared theirs back under political pressure. Anti-DEI shareholder proposals performed very poorly during the 2025 proxy season, showing little investor appetite to pull back on DEI-related initiatives.

Escalating Federal Anti-DEI Actions

• The Trump administration and Department of Justice have intensified scrutiny of DEI across federal agencies and contractors, including instigating fraud-based investigations and an executive order that ended federal DEI programmes.

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Many investors are appreciative of the benefits that DEI offers. These include a positive correlation between DEI initiatives and minority representation with company share value, improving reputation with the public and prospective employees and boosting employee retention. Despite the ever-rising rhetoric against DEI since the start of Donald Trump’s second term as US President in January 2025, it appears to resonate little with shareholders during the 2025 proxy season. Anti-DEI shareholder proposals in H1 2025 averaging just 1.5% support, lower than even the 2% average for anti-ESG proposals, as identified in Minerva Analytics’ Shareholder Proposal Voting Trends Report 2025.

This new legal opinion from Paxton overrides a 1999 legal opinion from previous Attorney General John Cornyn’s that “refused to address DEI’s faults and illegalities”. The Office of the Attorney General intends to continue investigations any school district, local governmental entity, state agency, or programme that “attempts to use DEI or affirmative action as a guise for unlawful discrimination, ideological coercion, or the erosion of merit-based decision-making” and hold those organisations “accountable”. “America is waking up to the egregious unfairness of DEI policies,” claimed Paxton. “This may come as a news flash to the radicals on the far-left, but our Constitution and the rule of law do not allow woke, race-based favoritism that tears our country apart.”

Under Paxton’s leadership, Texas was at the forefront of campaigns against ESG, DEI, proxy advisors and asset managers during 2025, as reported by Minerva Analytics, positioning the state at the head of the Republican-driven anti-ESG push. Last January, Paxton led 19 attorney generals of Republican states in sending a letter to the CEO of Costco accusing the company of reinforcing policies they claim violate merit-based principles and federal law, as reported by Minerva Analytics.

This letter demanded that Costco inform the states within 30 days whether it intended to revoke its DEI policies or provide a justification for maintaining them. The company stood strong on its pro-DEI stance, stressing that its DEI policies contribute positively to the company’s financial performance despite the pressure from the Republican states including Texas, as reported by Minerva Analytics. Apple is another example of companies continuing support for DEI, rejecting an anti-DEI shareholder proposal from the National Center for Public Policy Research in February, as reported by Minerva Analytics. A study also showed that companies which maintained their DEI programmes during 2025 benefitted from higher reputational scores than those that stripped back their initiatives.

Despite this, several other US companies last year opted to yield to the pressure from Republican policymakers and row back on their DEI-related policies and programmes. This included Rolls Royce abandoning its LGBTQ+ and other diversity programmes, as reported by Minerva Analytics, while Amazon, Disney, Meta and Target were among other major companies to pull back on DEI-related initiatives. Target suffered major reputational and financial damage following its controversial decision in 2025 to step back on its previous DEI commitments.

The same month as the Texas-led letter was sent to Costco, the Trump Administration issued an Executive Order entitled ‘Ending Radical And Wasteful Government DEI Programs And Preferencing’ as one of the President’s first acts in office. The order terminated federal DEI programmes, positions and mandates, resulting in hundreds of layoffs for federal employees. The administration later issued a letter in March urging several major EU-based companies to comply with the executive order prohibiting DEI programmes, as reported by Minerva Analytics.

Earlier this month, the US Department of Justice (DOJ) launched a new assault on DEI in setting out plans to apply fraud law as a further disincentive to companies applying such policies, as reported by Minerva Analytics. Under the stewardship of the Trump administration, the department is reportedly set to argue that considering diversity when hiring while having a federal contract is effectively fraud against the government, with Alphabet’s Google and Verizon Communications among the companies to have received demands for documents and information about their workplace programmes.

US Department of War Secretary Pete Hegseth this week pledged to take a “sledgehammer” to DEI programmes, outlining plans to review more than 4,300 companies participating in a federal contracting scheme that aims to support small business owners that face socially and economically disadvantaged circumstances.

Texas’ Paxton has also engaged in a high-profile conflict with proxy advisors, which is set to see movement next month. Texas’ Senate Bill (SB) 2337 which aims to restricting proxy advisory services and investor choice on a worldwide basis was due to come into effect in September. However, a preliminary injunction was granted against SB 2337 by a Trump-appointed Republican judge following two separate lawsuits by major proxy advisors, with a trial due to start on 2 February, as reported by  

Earlier this month, the Interfaith Center on Corporate Responsibility (ICCR) filed a Motion for Summary Judgment in its challenge against Texas statute SB 2337. The ICCR jointly filed the suit in federal court in November 2025 alongside the United Church Funds and Ceres which argued that the law that imposes “unprecedented and burdensome unconstitutional obligations” on the Center and similarly situated organisations.

Minerva Analytics filed a Texas Public Information Act (TPIA) request (freedom of Information request) with the Texas Attorney General in September seeking disclosure of communications between the Attorney General’s office, the Texas Stock Exchange – which had moved to intervene in support of SB 2337 in August – and related parties concerning proxy advisory services and SB 2337. The objective is to clarify whether coordination has occurred and to safeguard investors’ right to independent analysis free from political interference.

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Last Updated: 23 January 2026