On September 1, 2021, Texas enacted legislation (SB 13) that is one of the most far-reaching anti-ESG laws among states. The bill prohibits state agencies from investing in companies that “boycott” energy companies and requires Texas to completely divest from all of these designated companies (not ending boycotts of energy companies). as long as). The bill is one of many laws proposed and enacted by conservative states that would direct state retirement funds to companies that embrace an ESG-focused agenda from the perspective of those states. It primarily targets companies looking to limit their relationships. with fossil fuel companies. In fact, the law is specifically designed to combat a “movement” that “denies capital to responsible, hard-working energy businesses (in Texas).”
A few weeks ago, the U.S. Sustainable Business Council, a business organization focused on sustainability, said that “the rights to free speech and freedom of association have been inexcusably undermined under a scheme of politicized viewpoint discrimination.” A lawsuit was filed to declare the law unconstitutional on the grounds that it violates the law. In “Violations of the First and Fourteenth Amendments.” Essentially, the complaint seeks to invalidate Texas’ anti-ESG law on a variety of constitutional grounds, the most prominent of which is that the law requires “speech against reliance on fossil fuels.” This is because it restricts speech by punishing “acts of expression and other acts of expression” and is therefore a violation. Guarantee the right to free association by imposing penalties on “companies that refuse to partner with companies in the fossil fuel industry.”
The outcome of this case is a direct constitutional challenge to the effectiveness of some of the most prominent anti-ESG laws and common tactics (such as blacklisting) and will influence future legislative action across the country. If this law is overturned, the anti-ESG movement may adopt other tactics. Conversely, if the law stands, many other states are likely to follow Texas’ lead and seek to punish companies for ESG-focused actions that politicians deem objectionable.
Sustainability-focused business groups sued Texas officials in federal court on Thursday, seeking to block a law that would limit the state’s investments in financial firms and businesses that want to reduce dependence on fossil fuels.
The U.S. Sustainable Business Council recommends that state public entities, such as counties, cities, public retirement funds, and schools, invest with companies based on the companies’ “actual or perceived political views on fossil fuels.” Objected to Texas Senate Bill 13, which prohibits companies from signing or contracting. ” according to the complaint.
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