The Rise of State Anti-ESG Legislation


“[I]f you boycott Texas energy, then Texas will boycott you.”[1] In 2021, Texas enacted Senate Bill 13, a law that prohibits the state from doing business with financial institutions that the state deems are boycotting energy companies.[2] The law tasks the Texas Comptroller with keeping track of such financial companies.[3] In August of this year, Texas Comptroller, Glenn Hegar, announced a list of ten financial companies and almost 350 investment funds that are banned from doing business with the state of Texas.[4] The list includes BlackRock, BNP Paribas, UBS Group AG.[5] The law affects state pension funds and municipal bonds issued by local governments that worked with companies on the list.[6] The Texas legislation is among a growing trend of anti-ESG legislation. Eighteen states have adopted or proposed anti-ESG legislation or regulations in the past year.[7] While anti-ESG legislation varies, some states—such as Texas—have enacted or proposed “boycott bills.”[8] Boycott bills seek to prohibit the state government from doing business with financial institutions that the state believes boycott industries important to the state economy, such as the fossil fuel and firearms industries.[9] The industries that are protected by the boycott bills vary among the states.[10] For example, Idaho and Minnesota protect the mining, agriculture, lumber, and timber industries in their proposed bills.[11]

Another type of anti-ESG regulation prevents state fund managers from considering ESG factors when investing state funds.[12] In August, Florida adopted this type of anti-ESG policy.[13] The State Board of Administration (the “SBA”) passed a resolution that prohibits its consideration of ESG policies when investing Florida’s pension funds.[14] In a statement, Florida Governor, Ron DeSantis, who sits on the SBA, said, “Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity.”[15] Like DeSantis, proponents of anti-ESG legislation criticize ESG investments as putting ideology above shareholder profits.[16]

However, the anti-ESG movement misconstrues ESG policies and goals. ESG does not have a single agreed upon meaning.[17] Martin Lipton describes ESG as “a collection of quite disparate risks that corporations face, from climate change to human capital to diversity to relations among the board, management, shareholders, and other stakeholders.”[18] However, anti-ESG laws condemn ESG investing for placing so-called “ideological”[19] concerns over profits, rather than considering the impact of environmental and social concerns on future earnings.[20]

ESG’s vague definition allows lawmakers to cast a wide net in defining what constitutes boycotts of certain industries. For example, in Texas, financial institutions with funds that “prohibit or limit investment in fossil fuels” could make them a fossil fuel boycotter according to the state of Texas and land them on the list.[21] Ironically, BlackRock, a financial company on the Texas boycott list, invests “over $100 billion in Texas energy companies.”[22]

The inclusion of financial companies like BlackRock on states’ boycott lists has led some to believe that the anti-ESG movement is a way for politicians to boost their image, rather than protect their states’ industries or prioritize shareholder profits.[23] Critics of anti-ESG legislation have drawn comparisons to conservative politicians’ attacks on critical race theory, which is similar to ESG in that both are topics that the public knows little about and will believe whatever meaning prescribed to it by conservative politicians.[24]

In the end, anti-ESG laws may be costing taxpayers more and have little effect on the financial institutions that are the target of such laws. A study from the Wharton School of the University of Pennsylvania estimated that Texas cities will have to “pay an additional $303 million to $532 million in interest on $32 billion in bonds” because they can no longer use certain banks as underwriters for municipal bonds, thereby making the market less competitive.[25]Yet, it is unlikely that the boycotted financial institutions will lose enough of their profits to change their ESG policies.[26]

As more states adopt anti-ESG legislation, the overall impact may be large enough to affect financial companies’ ESG policies.[27] But only time will tell whether the anti-ESG movement will remain a political talking point or make an impact on financial companies.

[1] Mario A. Ariza & Mose Buchele, Texas Stumbles in Its Effort to Punish Green Financial Firms, NPR (Apr. 29, 2022, 5:01 AM), (quoting Texas Representative Phil King).

[2] Tex. Gov’t Code Ann. § 809 (West 2021); see also Ariza & Buchele, supra note 1.

[3] Id.

[4] Texas Comptroller Glenn Hegar Announces List of Financial Companies that Boycott Energy Companies, Comptroller.Texas.Gov (Aug. 24, 2022), [hereinafter Hegar Release].

[5] Richard Vanderford, Texas Blacklists BlackRock, UBS and Other Financial Firms Over Alleged Energy Boycotts, Wall St. J. (Aug. 24, 2022 6:50 PM),

[6] Mitchell Ferman, Texas Bans Local, State Government Entities From Doing Business With Firms That “Boycott” Fossil Fuels, Tex. Trib. (Aug. 24, 2022, 4:00 PM),

[7] Elizabeth S. Goldberg et al., Update: Four More States Move Toward Anti-ESG Regulations, Morgan Lewis: ML Benebits (Oct. 13, 2022),

[8] Id.

[9] Id.

[10] See Lance Dial et al., The Challenge of Investing in the Face of State Anti-ESG Legislation, Reuters (Aug. 24, 2022, 10:02 AM),

[11] Heath Cheek & Mason Jones, Why Companies Should Watch Anti-ESG Litigation, Bloomberg L. (Sept. 23, 2022, 4:00 AM),

[12] Goldberg et al., supra note 7.

[13] Staff ofGov. Ron DeSantis, Governor Ron DeSantis Eliminates ESG Considerations From State Pension Investments,Fl. Gov. (Aug. 23, 2022), [hereinafter DeSantis Release]; see also Andrew R. Sorkin et al., DeSantis Claims Win in Campaign Against E.S.G., N.Y. Times: DealBook (Aug. 25, 2022),

[14] DeSantis Release, supra note 13.

[15] Id.

[16] See id.; Hegar Release, supra note 4.

[17] See Martin Lipton et al., ESG, Stakeholder Governance, and the Duty of the Corporation, Harv. L. Sch. F. on Corp. Governance (Sept. 18, 2022),

[18] Id.

[19] DeSantis Release, supra note 13.

[20] See Hegar Release, supra note 4; see also DeSantis Release, supra note 13.

[21] Ariza & Buchele, supra note 1.

[22] Vanderford, supra note 5.

[23] See Tim Quinson, Red State Republicans’ War on ESG Will Have Losses on Both Sides, Daily Bus. Rev. (Aug. 31, 2022, 10:31 AM),

[24] See Casey Quinlan, GOP Leaders Target ‘Woke’ Investments Through State Pension Funds, La. Illuminator (Sept. 19, 2022, 11:44 AM),

[25] Angie Basiouny, Texas Fought Against ESG. Here’s What it Cost, Knowledge Wharton (July 12, 2022),

[26] See Quinson, supra note 22.

[27] See Tim Quinson, BlackRock Is Getting Used to Being in the ESG Crossfire, BNN Bloomberg (Oct. 25, 2022),


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Fordham Journal of Corporate & Financial Law