Texas anti-ESG Law declared unconstitutional in the US by a US judge

A federal judge ruled that a Texas law enacted in 2021 restricting the state's investments to?companies who seek?to reduce their reliance on fossil fuels, or boycott this industry.

The U.S. district judge Alan Albright made his decision public on Wednesday. He said that the law violated First Amendment protections for free speech because it penalized businesses for?speaking about fossil fuels' and?associating themselves with groups who oppose fossil fuels.

The Austin, Texas based?judge called the law known by Senate Bill 13 as "facially broad" and "unconstitutionally unclear," saying that it has already led and prompted discriminatory enforcement. Albright, an appointee to U.S. president Donald Trump, wrote that SB 13's definition for 'boycotting energy companies' allows the state to penalize companies based on any protected expression regarding?fossil-fuels.

Texas is the most oil-producing U.S. state and also the state with the highest Republican representation. It has been the hardest on companies whose policies are against environmental, social, and governance (ESG). The American Sustainable Business Council challenged Senate Bill 13 in an August 2024 suit, saying that it illegally codified a viewpoint-based bias that hurts more than?250,000 of its members. The lawsuit named as defendants former Texas Comptroller Glenn Hegar and Texas Attorney General Ken Paxton. Paxton's office and that of Hegar’s acting successor Kelly Hancock didn't?respond immediately to comments on Thursday.

David Levine (?president and founder of the ASBC) called the decision in a press release a "massive victory" for sustainable businesses and investors.

Levine stated, "The court has confirmed what we have always known: You cannot punish companies for their investment choices or silence those who talk about climate risks." Reporting by Jonathan Stempel, New York; Editing and proofreading by Mark Porter

(source: Reuters)