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Group sues Texas over law banning state business with firms 'boycotting' fossil fuels

A business group is suing Texas over the so-called “anti-ESG law.” Photo via Getty Images

A progressive business group sued Texas on Thursday over a 2021 law that restricts state investments in companies that, according to the state, “boycott” the fossil fuel industry.

The American Sustainable Business Coalition filed suit against Attorney General Ken Paxton and Comptroller Glenn Hegar, alleging that the law, Senate Bill 13, constitutes viewpoint discrimination and denies companies due process, in violation of the First and Fourteenth Amendments. The group asked a federal judge in Austin to declare the statute unconstitutional and permanently block the state from enforcing it.

“Texas has long presented itself as a business-friendly state where limited state regulation facilitates the ability of businesses to conduct themselves as they see fit,” lawyers for the group wrote. “Yet in 2021, the Legislature passed SB 13 to coerce and punish businesses that have articulated, publicized, or achieved goals to reduce reliance on fossil fuels.”

Known as the “anti-ESG law” — which stands for “environmental, social and governance” — Senate Bill 13 requires state entities, including state pension funds and the enormous K-12 school endowment, to divest from companies that have reduced or cut ties with the oil and gas sector and that Texas officials deem antagonistic to the fossil fuel industry.

In approving the legislation, Republican officials looked to protect Texas oil and gas companies and to bite back at Wall Street investors pulling financial support from the industry in an effort to incorporate climate risk into their investments and respond to pressure to divest from fossil fuels, which play an outsized role in accelerating the climate crisis.

In March, Texas Permanent School Fund, Austin, cut ties with BlackRock, which managed roughly $8.5 billion of the $52.3 billion endowment and which was listed by Texas as one of the companies that should not handle state business.

The statute defines “boycott” as, “without an ordinary business purpose, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with” a fossil fuel company. It also prohibits state agencies from doing business with a firm unless it affirms that it does not boycott energy companies. And it charges the state comptroller with preparing and maintaining a blacklist of companies based on “publicly available information” and “written verification” from the company.

In a statement, Hegar, the comptroller, called the lawsuit an “absurd” attempt to “force the state of Texas and Texas taxpayers to invest their own money in a manner inconsistent with their values and detrimental to their own economic well-being.”

“This left-wing group suing Texas,” he said, “is hiding their true intent: to force companies to follow a radical environmental agenda that is often contrary to the interests of their shareholders and to punish those companies that do not fall into lockstep and put politics above earnings.”

Paxton’s office did not immediately reply to a request for comment.

Texas has blacklisted more than 370 investment firms and funds, including BlackRock and funds within major banks like Goldman Sachs and J.P. Morgan. BlackRock, among other companies, pushed back on its designation as “boycotting” fossil fuels, calling the decision “not a fact-based judgment” and citing over $100 billion in investments in Texas energy companies.

“Elected and appointed public officials have a duty to act in the best interests of the people they serve,” a BlackRock spokesperson said at the time. “Politicizing state pension funds, restricting access to investments, and impacting the financial returns of retirees, is not consistent with that duty.”

In Thursday’s suit, the American Sustainable Business Coalition argued that the physical and financial risks posed by climate change are a legitimate investment and business consideration and cause for efforts to reduce carbon emissions.

The group said the Texas law was enacted to go after what Republican lawmakers saw as a “burgeoning fossil fuel discrimination movement,” and that it effectively “infringes rights of free speech and association under a scheme of politicized viewpoint discrimination” and allows Texas officials to “punish companies they believe are insufficiently supportive of the fossil fuel industry.”

The group argued that the law penalizes companies for their energy policies and membership in certain business associations, and compels them to adopt positions that align with Texas officials “as a condition” of doing business with state entities.

The suit also alleged that the law violates companies’ right to due process because vagueness in the statute “encourages arbitrary enforcement” and fails to provide blacklisted companies a fair process to contest their designation.

Texas blacklisted “the flagship investment funds” of Etho Capital and Sphere, two climate-focused firms represented by the American Sustainable Business Coalition, according to the lawsuit.

“Among ASBC’s many projects are efforts to encourage sustainable investing and sustainable business practices,” the lawsuit reads. “These are all cornerstones of the modern Texas economy. Yet, SB 13 takes aim at, and punishes, companies that speak about, aspire to, and achieve this goal.”

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This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.

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A View From HETI

Ford Motor Company and TXU Energy are partnering to create a first-of-its-kind retail energy offering for Ford electric SUV and truck customers in Texas via the TXU Free EV Miles program. Photo courtesy of Ford

Buckle up, Ford drivers and TXU Energy customers — you're going to want to speed toward this deal.

Ford Motor Company and TXU Energy are partnering to create a first-of-its-kind retail energy offering for Ford electric SUV and truck customers in Texas via the TXU Free EV Miles program.

The program offers Ford EV customers the opportunity to charge their vehicle at home for free during an 18-hour window. Enrollment for the “Free EV Miles program” is open to interested Ford and TXU Energy customers.

“This partnership with Ford fits squarely into TXU Energy’s broader strategy of educating customers on the benefits of owning an EV, removing barriers to making the switch, and increasing grid resiliency,” Sam Sen, vice president of energy transition solutions for TXU Energy, says in a news release. “We are proud to support Ford’s Texas EV customers with flexible, free charging hours and the significant cost savings that come with it.”

Ford EV customers will receive a credit on their TXU Energy bill for all home energy used for vehicle charging during all year free charging hours from 7 p.m an 1 p.m. The program hopes to help support grid reliability efforts and clean energy usage since it will encourage energy consumption during off-peak hours.

According to Ford, around 80 percent of charging takes place at home. Charging can even be scheduled through the Preferred Charge Times feature in the FordPass app or in-vehicle touchscreen. If customers need to charge outside of the free hours, they will pay a fixed rate, which is the same rate as the rest of their home according to Ford.

“Encouraging our electric vehicle customers to charge at off-peak hours through programs like Free EV Miles helps to save them money while supporting a more sustainable, resilient electrical grid,” Bill Crider, senior director, global charging and energy services at Ford, says in a news release. “Ford electric SUV and trucks already have a lower operating and maintenance cost compared to gas-powered vehicles, and at-home charging offers additional financial perks and future vehicle-to-grid services never before possible, which Ford is committed to leading for our customers.”

The program will allow Ford F-150 Lightning, Mustang Mach-E, and Escape Plugin Hybrid customers to benefit from bill credits when they enroll in the Free EV Miles energy plan. They can also earn additional benefits from both Ford and TXU Energy like a $100 welcome bonus from Ford and a $250 bonus from TXU Energy. Enrolled customers will begin receiving automatic rebates for at-home charging costs during the free charging hours.

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