The American Sustainable Business Council recently filed a lawsuit against Texas Attorney General Ken Paxton and Comptroller Glenn Hegar over a 2021 state law that punishes financial institutions that invest with environmental, social, and governance (ESG) minded priorities. The plaintiff is a nonprofit the represents companies preferring environmentally friendly policies that says Texas’s Senate Bill 13 directly hurts its members.
As part of the law, the state comptroller maintains a list of companies that are considered to be participating in boycotts of the oil and gas industry and Texas entities cannot invest with them. As reported by Bloomberg Law:
“While SB 13 is in effect, ASBC members like Etho Capital, Sphere, and others are unable to compete for business with Texas entities solely due to the content and viewpoint of their speech and the associations they choose to make,” the lawsuit says. “The law also denies them any avenue for challenging their exclusion from this major market.”
Earlier this year, the Texas Permanent School Fund announced it would divest $8.5 billion from BlackRock Inc., which is on the energy boycott list. The law has also affected Wall Street banks’ public finance work in Texas.
The plaintiff further alleges SB 13 is designed to “coerce and punish” those seeking to reduce reliance on fossil fuels and therefore violates their First Amendment rights. “It impermissibly infringes rights of free speech and association under a scheme of politicized viewpoint discrimination, based on no legitimate state interest,” according to the lawsuit.
Similar laws in Oklahoma and Missouri have been blocked by courts.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @[email protected].
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