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A progressive business group took legal action against Texas on Thursday over a 2021 law that limits state investments in companies that allegedly “boycott” the fossil fuel industry. The American Sustainable Business Coalition filed a lawsuit against Attorney General Ken Paxton and Comptroller Glenn Hegar, arguing that Senate Bill 13 violates the First and Fourteenth Amendments by engaging in viewpoint discrimination and denying companies due process. The group is seeking a federal judge in Austin to declare the law unconstitutional and prevent its enforcement.
The legislation, known as the “anti-ESG law” (environmental, social, and governance), requires state entities to divest from companies that have reduced ties with the oil and gas sector. This move aims to protect Texas oil and gas companies and counteract Wall Street investors divesting from the industry due to climate concerns. The law defines boycott as any action intended to penalize or limit relations with a fossil fuel company, leading to the blacklisting of over 370 investment firms and funds.
Hegar criticized the lawsuit as an attempt to force Texas and its taxpayers to invest in a manner conflicting with their values. The suit alleges that the law infringes on free speech, penalizes companies for their energy policies, and fails to ensure due process for blacklisted entities. The American Sustainable Business Coalition argued that the law targets companies advocating for sustainable business practices, hindering the state’s modern economy development.
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