The American Sustainable Business Council (ASBC) has filed a lawsuit against Texas officials, hoping to block a law that restricts state investments in certain financial firms based on their energy policies. The litigation was filed in federal court in Austin and argues that the 2021 state law is unconstitutional, aiming to “coerce and punish” businesses that are attempting to reduce reliance on fossil fuels. The ASBC, which represents thousands of businesses advocating for environmentally-friendly policies, has named Texas Comptroller Glenn Hegar and Attorney General Ken Paxton as defendants in the suit.
The core argument centers on the alleged infringement of First Amendment rights, claiming the law imposes politicized viewpoint discrimination without a legitimate state interest. According to lawyers representing the ASBC, the law “impermissibly infringes rights of free speech and association” and is designed to suppress particular viewpoints in the business community.
Comptroller Glenn Hegar has dismissed the lawsuit as “frivolous,” asserting that it undermines state sovereignty and forces Texas and its taxpayers to invest against their values and economic interests. As part of the contested law, Hegar publishes a list of companies and investment funds deemed as boycotting the oil and gas industry, which most recently includes NatWest Group Plc.
The ASBC claims that its members, including investment companies like Etho Capital LLC and Our Sphere Inc., have faced substantial harm because of their inclusion on Hegar’s list. Such entities are unable to engage in business with Texas state pensions, which cuts them off from a significant market without any recourse to challenge their exclusion.
Recent developments underscore broader resistance to such laws. A judge in Oklahoma recently blocked the enforcement of a similar anti-ESG law, and a federal judge ruled against similar measures in Missouri, declaring them unlawful. The controversies surrounding these laws also indicate a growing concern over their impact on local governments and businesses, with rising borrowing costs for municipalities cited as a noteworthy consequence.
The case, American Sustainable Business Council v. Hegar, is ongoing in the U.S. District Court, Western District of Texas (Austin). For a more detailed overview, you can refer to the original report from Bloomberg Law here.