Texas' Anti-ESG Law Gets a Judicial Reboot: Free Speech, Fossil Fuels, and the Art of Overreach

When Politics Meets Portfolio: A Texas Tale

In the grand Texas tradition of legislative rodeos, Senate Bill 13—crafted in 2021 as a lasso for companies suspected of fossil fuel treason—has been unhorsed by a federal judge. The law, designed to keep state investments locked in with oil and gas, was found to be, in legal parlance, “facially overbroad”—a phrase that in plain English means "painted with a brush wider than the Texas panhandle."

Judge Alan Albright, wielding a gavel and the First and Fourteenth Amendments, decreed that the law’s definition of "boycotting" fossil fuel companies was so vague and sweeping it could rope in just about anyone for any reason. The law required the state comptroller to keep a blacklist (sorry, a publicly available list) of financial firms that dared to cold-shoulder fossil fuels "without ordinary business purpose." The result? Over 300 companies branded as energy heretics—though some, like BlackRock, managed a Houdini act after recanting climate vows.

🦉 Owlyus preens: "Nothing says 'free market' like a government-issue enemies list."

Billions Divested, Billions Debated

Once the law took effect, Texas' mighty public funds—including those for teachers and schoolchildren—divested billions from the blacklisted firms. The financial world, always a fan of acronyms, dubbed the legislation “anti-ESG” (environmental, social, governance), while the state called it a victory lap for the economy.

But the American Sustainable Business Coalition (ASBC), perhaps less enamored with legislative rodeos, sued the state, arguing the law trampled free speech and due process. Judge Albright agreed—at least on three counts—delivering a 12-page opinion that did not mince words about the law’s penchant for “discriminatory enforcement.”

Free Speech, Now Accepting Dividends

The ruling was quickly anointed a win for state workers and retirees, with advocates crowing about the restoration of "politics-free" public finance. As the president of the Alliance for Prosperity and a Secure Retirement declared, investment decisions should be based on fiduciary duty, not political fashion statements.

The Texas Comptroller’s Office and Attorney General’s Office, perhaps busy updating their lists or drafting new bills, had no immediate comment. Meanwhile, the rest of the nation watches with popcorn in hand, eager to see if Texas will double down or change horses midstream.

🦉 Owlyus hoots: "In Texas, the only thing longer than a list of blacklisted companies is the list of unintended consequences."