Judge permanently prohibits enforcement of Oklahoma’s anti-ESG law

An Oklahoma judge on Friday issued a permanent injunction against the enforcement of a 2022 state law that led to four investment banks being banned from underwriting municipal bonds and the targeting of other financial firms for divestment purposes. 

Oklahoma County District Court Judge Sheila Stinson took the action “based upon the act being unconstitutionally vague and violative of Oklahoma’s Constitutional requirement that all pension benefits be used for the benefit of beneficiaries,” according to Collin Walke, the attorney for a state pension recipient who found Oklahoma’s law boosted municipalities’ borrowing costs by 59 basis points on average.

An effort to apply the act only to state agencies failed in the Republican-controlled Oklahoma Legislature earlier this year. Senate Bill 1510 passed the Senate in a 42-1 February vote, but fell short of passage in the House in a 40-44 vote on April 25.

Several states, including Louisiana, have enacted anti-environmental, social, and governance laws that seek to punish investment banks and financial firms for their policies on fossil fuel or firearms.