Texas Anti-ESG Law Ruled Unconstitutional by Federal Judge

A federal judge has ruled unconstitutional a 2021 law that restricted state investments in companies aiming to reduce their reliance on fossil fuels or boycott that industry.

In a decision made public on Wednesday, U.S. District Judge Alan Albright stated that the law infringed upon First Amendment free speech protections by penalizing businesses for expressing views on fossil fuels and for associating with organizations that oppose them.

Judge Albright, based in Austin, Texas, described the law, known as Senate Bill 13, as “facially overbroad” and “unconstitutionally vague.” He emphasized that it invites, and has already resulted in, discriminatory enforcement.

“SB 13’s definition of ‘boycott energy companies’ allows the state to penalize companies for a wide range of protected expressions regarding fossil fuels,” Albright noted, highlighting the law’s potential for misuse.

Texas stands as the largest oil-producing state in the U.S. and is also the largest Republican-led state to impose restrictions on businesses whose environmental, social, and governance (ESG) policies it opposes.

The American Sustainable Business Council (ASBC) challenged Senate Bill 13, asserting in August 2024 that the law codified viewpoint-based discrimination, adversely affecting its more than 250,000 members.

Texas Attorney General Ken Paxton and former Texas Comptroller Glenn Hegar were named as defendants in the case. As of Thursday, the offices of Paxton and Hegar’s acting successor, Kelly Hancock, had not responded to requests for comment.

David Levine, president and co-founder of the ASBC, hailed the ruling as a “massive win” for sustainable businesses and investors. He stated, “The court has affirmed what we’ve always known: you cannot punish businesses for their investment decisions or silence those who speak about climate risk.”

(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)

Topics
USA
Texas
Legislation

A federal judge has ruled unconstitutional a 2021 law that restricted state investments in companies aiming to reduce their reliance on fossil fuels or boycott that industry.

In a decision made public on Wednesday, U.S. District Judge Alan Albright stated that the law infringed upon First Amendment free speech protections by penalizing businesses for expressing views on fossil fuels and for associating with organizations that oppose them.

Judge Albright, based in Austin, Texas, described the law, known as Senate Bill 13, as “facially overbroad” and “unconstitutionally vague.” He emphasized that it invites, and has already resulted in, discriminatory enforcement.

“SB 13’s definition of ‘boycott energy companies’ allows the state to penalize companies for a wide range of protected expressions regarding fossil fuels,” Albright noted, highlighting the law’s potential for misuse.

Texas stands as the largest oil-producing state in the U.S. and is also the largest Republican-led state to impose restrictions on businesses whose environmental, social, and governance (ESG) policies it opposes.

The American Sustainable Business Council (ASBC) challenged Senate Bill 13, asserting in August 2024 that the law codified viewpoint-based discrimination, adversely affecting its more than 250,000 members.

Texas Attorney General Ken Paxton and former Texas Comptroller Glenn Hegar were named as defendants in the case. As of Thursday, the offices of Paxton and Hegar’s acting successor, Kelly Hancock, had not responded to requests for comment.

David Levine, president and co-founder of the ASBC, hailed the ruling as a “massive win” for sustainable businesses and investors. He stated, “The court has affirmed what we’ve always known: you cannot punish businesses for their investment decisions or silence those who speak about climate risk.”

(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)

Topics
USA
Texas
Legislation