Texas was sued Thursday by a nonprofit whose members support environmentally friendly policies and is seeking to block a state law targeting companies that support reducing reliance on fossil fuels.
The American Sustainable Business Council said the 2021 law, known as Senate Bill 13, violates its members’ free speech rights by prohibiting Texas from investing in or contracting with companies that the state says are “boycotting” the oil and gas industry.
Texas is the largest state, and one of the most important, led by Republicans to crack down on companies whose environmental, social and governance (ESG) policies it dislikes. It is also, by far, the largest oil-producing state in the United States.
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 federal court in Austin, Texas.
Representatives from their offices did not immediately respond to requests for comment.
As part of the 2021 law, Glenn Hegar maintains a list of 16 financial companies and more than 350 investment funds whose ESG policies, according to him, impermissibly target fossil fuel-based energies.
It added British bank NatWest to that list two weeks ago. In March, the Texas Permanent School Fund said it would withdraw $8.5 billion in assets managed by BlackRock, which is also on the comptroller’s list.
The American Sustainable Business Council said Senate Bill 13 hurt its corporate and individual members, who represent more than 200,000 businesses, even though Texas bills itself as a business-friendly state.
Two of its members, Etho Capital and Our Sphere, have funds on Mr. Hegar’s list.
“The law violates the First Amendment by prohibiting companies from competing for state investment or contracting with the state when Texas believes those companies take an unfavorable viewpoint on fossil fuels,” the complaint states. “Because SB 13 codifies viewpoint discrimination, it is presumptively unconstitutional.
The case is: American Sustainable Business Council v. Hegar et al, US District Court, Western District of Texas, No. 24-01010.
