Borrowing costs rose in the wake of Oklahoma’s anti-ESG law: study
3 min readAn Oklahoma law that banned state and local government contracts with investment banks that “boycott” the fossil fuel industry boosted municipalities’ borrowing costs by 59 basis points on average, according to the latest research into the financial impact of so-called anti-environmental, social, and governance laws.
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Travis Roach, chair of the University of Central Oklahoma’s Economics Department, who conducted the study, found that over the approximately 17 months the law has been in effect, about $4.6 billion of municipal bonds were issued at higher coupon rates relative to borrowings in four states without a similar law. As a result, Oklahoma municipalities incurred an estimated $184.7 million in additional expenses.
“This increase in borrowing costs imposes an unnecessary financial burden on Oklahoma municipalities, potentially forcing them to cut spending on important public services or infrastructure projects, or raise taxes to cover the higher debt servicing costs,” the study concluded.
As large financial institutions “with the scale, scope, and experience of providing municipal bond issuance services” are banned from underwriting government debt in Oklahoma, borrowing costs may increase simply because smaller firms lack that reach, it added.
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Monica Collison, president of the ORA, an organization created to support economic development and infrastructure for the state’s rural communities, said while the law aimed to be “a ‘solution’ to combat the misguided perception of boycotting by financial institutions of certain industries,” the result was a politically motivated attempt to remove certain banks from operating in Oklahoma.
Oklahoma Treasurer Todd Russ was aware of the “unintended consequences” posed by the law’s inclusion of state political subdivisions, according to Deputy Treasurer Jordan Harvey, who noted legislation introduced this session seeks to amend the act.
Another bill would apply a provision against contracts worth $100,000 or more with “boycotters”
Another bill that
A 2022 academic paper found similar Texas laws enacted in 2021 to protect the fossil fuel and firearm industries against boycotts and discrimination may
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In March, a Texas business group released a