Texas Faces Legal Battle Over Anti-ESG Legislation

In a fresh twist of courtroom drama, Texas is under fire from a nonprofit advocating for sustainable business practices. The American Sustainable Business Council has filed a lawsuit challenging Senate Bill 13, a 2021 state law that bars Texas from investing in or contracting with businesses deemed to “boycott” the oil and gas sector.

The council argues that the law infringes on free speech rights by penalizing companies that support reduced fossil fuel dependency. Texas, a major player in oil production and a staunch Republican state, has made headlines for its stringent stance against businesses with ESG (environmental, social, and governance) policies that oppose fossil fuels.

The lawsuit, lodged in Austin’s federal court, names Attorney General Ken Paxton and Comptroller Glenn Hegar as defendants. Hegar, who oversees a blacklist of financial firms and funds with unfavorable ESG policies, has dismissed the suit as a misguided effort to impose a “radical environmental agenda” and undermine Texas’s economic interests.

The American Sustainable Business Council claims the law negatively impacts its members, which include over 200,000 businesses. Companies like Etho Capital and Our Sphere, which are affected by Hegar’s blacklist, argue that the law’s viewpoint-based discrimination violates the First Amendment.

This case, officially titled American Sustainable Business Council v. Hegar et al., is set to test the boundaries of free speech and state power in the realm of corporate sustainability.

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