Group sues Texas over “anti-ESG” law 

September 4th, 2024

A nonprofit organization has filed a lawsuit against Texas seeking to overturn a 2021 bill that limits investments in businesses that “boycott energy companies”.

The American Sustainable Business Coalition, which represents more than 200,000 businesses, filed a suit against Attorney General Ken Paxton and Comptroller Glenn Hegar, alleging that Senate Bill 13 is unconstitutional.

Known as the “anti-ESG law”, the bill prohibits certain state entities from investing in, and requires them to divest from, financial companies that have reduced or cut ties with the oil and gas sector.

It also bans governmental entities, such as public retirement funds and schools, from entering contracts with companies for goods or services unless the company provides written confirmation that it does not participate in activities to boycott fossil fuel companies.

The group argues that the bill infringes on members’ free speech and is overly vague, which could result in unfair enforcement, thus violating the First and Fourteenth Amendments.

As a result, it has requested that the judge declare the law as unconstitutional and issue a permanent injunction to prevent the state from enforcing it.

The group stated: “Texas has long presented itself as a business-friendly state where limited state regulation facilitates the ability of businesses to conduct themselves as they see fit.

“Yet in 2021, the Legislature passed SB 13 to coerce and punish businesses that have articulated, publicized, or achieved goals to reduce reliance on fossil fuels.”

Comptroller Hegar dismissed the lawsuit as “absurd”, arguing that it seeks to force Texas and its taxpayers to adhere to a “radical environmental agenda” by making them invest in ways that contradict their values and are detrimental to their economic well-being.

He said: “During a time when experts are revising long-term fossil fuel demand projections drastically upward, these groups continue to shove their radical agenda onto consumers and ignore the critical role this sector plays, and will continue to play, in our daily lives.”

Minerva’s blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.