The Texas legal landscape is heating up as the American Sustainable Business Council (ASBC), a champion for sustainable business practices, has filed a lawsuit against the state to overturn Senate Bill 13.
According to ESG News, this legislation, which took effect in 2021, prevents Texas from engaging financially with companies that “boycott” the fossil fuel industry. ASBC’s lawsuit, which was filed in Austin’s federal court, argues that the law violates the First Amendment by penalizing companies for their environmental viewpoints, specifically their reduction in dependency on fossil fuels.
Texas Comptroller Glenn Hegar has responded robustly, labeling the lawsuit as “frivolous” and contrary to the economic interests and values of Texas taxpayers. Hegar has been active in maintaining a list of companies that he believes are unfairly targeting the fossil fuel industry through their ESG policies, including major names like NatWest and BlackRock.
The lawsuit claims that Senate Bill 13 represents “viewpoint-based discrimination” and is therefore “presumptively unconstitutional.”
The legal challenge is set to be adjudicated in the U.S. District Court for the Western District of Texas, with significant implications for how states can regulate corporate involvement in ESG matters. Texas Attorney General Ken Paxton, also named in the lawsuit, has not yet made a public comment on the matter.
The ASBC, representing over 200,000 businesses, asserts that Senate Bill 13 has detrimentally affected its member companies. Some of these members, including Etho Capital and Our Sphere, have reportedly been negatively impacted by being placed on Hegar’s list due to their ESG policies.
The nonprofit’s legal action underscores a broader debate on the role of state laws in regulating corporate social responsibility and free speech in business practices.
Texas Comptroller Glenn Hegar said, “This lawsuit is a frivolous attempt to force Texas and its taxpayers to invest in a manner inconsistent with their values and detrimental to their own economic well-being. That is absurd.”
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