Texas and Oklahoma anti-ESG laws defended amid attacks

The wagons are circling around anti-environmental, social, and governance laws enacted in Texas and Oklahoma amid a flurry of studies on their financial impact and congressional scrutiny.

The two states were early enactors of laws that led to the blacklisting of more than 20 financial firms, including municipal bond underwriters, for “boycotting” or “discriminating” against the fossil fuel or firearm industries. The laws call for divestment of public pension and other assets and prohibit governmental contracts worth $100,000 or more with banned firms.

The passage of a wide-variety of anti-ESG bills slowed dramatically this year with Pleiades Strategy, a research and advisory firm, looked at the impact if bills, similar to the Texas laws, were enacted in six other states, including Oklahoma, finding that state would have incurred an estimated $49 million in additional interest costs for bonds issued over a 12-month period.

Oklahoma Treasurer Todd Russ, who has blacklisted seven companies, including Barclays, Bank of America, JP Morgan, and Wells Fargo, defended the importance of the oil and gas industry to the state and pointed to a commercial banking sector trend toward “de-banking companies that do not align with certain ESG criteria.”

“This practice can have severe consequences for Oklahoma industries, limiting their access to capital and financial services,” he said in a June 28 statement. “By resisting policies that lead to de-banking, Oklahoma can safeguard its key industries from financial exclusion and ensure that businesses have the necessary resources to thrive.”

Enforcement of the Energy Discrimination Elimination Act was permanently halted last month by an Oklahoma County District Court judge, who found it violated the state constitution. The Oklahoma Supreme Court is expected to issue a procedural ruling soon related to the state attorney general’s appeal of the injunction.

The pro-ESG movement is fighting back. 

Unlocking America’s Future, a nonprofit advocacy group that works to counter attacks against ESG, launched a Texas campaign in May that includes a six-figure digital ad campaign “to set the record straight about the economic costs of Texas’ extreme positions on a range of issues including responsible investing.”  

As part of its 2024-25 platform and resolutions, the National Association of Counties noted “special interest groups are actively collaborating on a nationwide campaign to restrict and eliminate local authority regarding pensions, municipal bonds, and government funds by passing legislation and resolutions at both the national and state levels that oppose local control and free-market principles.”

The group adopted a policy in July urging “Congress and the administration to support policies that provide for local governments’ ability to invest and borrow as they self-determine, which must include continued access to free capital and credit markets.”