Texas is sued over anti-ESG law
By Jonathan Stempel
Aug 29 (Reuters) -Texas was sued on Thursday by a nonprofit whose members support environmentally-friendly policies, and which seeks to block a state law targeting businesses that support reduced reliance on fossil fuels.
The American Sustainable Business Council said the 2021 law known as Senate Bill 13 violates members' free speech rights by banning Texas from investing in or contracting with businesses that, in the state's view, "boycott" the oil and gas industry.
Texas is the largest and among the most prominent Republican-led states to crack down on businesses whose environmental, social and governance (ESG) policies it dislikes. It is also easily the largest U.S. oil producing state .
State Attorney General Ken Paxton and Comptroller Glenn Hegar, both Republicans who support the 2021 law, were named as defendants in the lawsuit filed in Austin, Texas federal court.
Representatives from their offices did not immediately respond to requests for comment.
In connection with the 2021 law, Hegar maintains a list of 16 financial companies and more than 350 investment funds whose ESG policies he believes impermissibly target fossil fuel-based energy.
Hegar added British bank NatWest NWG.L to the list two weeks ago. In March, the Texas Permanent School Fund said it would yank $8.5 billion of assets under management from BlackRock BLK.N, which is also on the comptroller's list.
The American Sustainable Business Council said Senate Bill 13 has harmed its corporate and individual members, who represent more than 200,000 businesses, despite Texas portraying itself as a business-friendly state.
Two members, Etho Capital and Our Sphere, have funds on Hegar's list.
"The law violates the First Amendment by barring companies from competing for state investments or contracting with the state whenever Texas believes those companies espouse a disfavored viewpoint about fossil fuels," the complaint said. "Because SB 13 codifies viewpoint-based discrimination, it is presumptively unconstitutional."
The case is American Sustainable Business Council v. Hegar et al, U.S. District Court, Western District of Texas, No. 24-01010.
Reporting by Jonathan Stempel in New York
Editing by Marguerita Choy
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.