Texas Judge Strikes Down Anti-ESG “Boycott” Law

SB 13 was one of the first “anti-ESG” laws to gain traction in the US, serving as both a model and catalyst for additional legislation in politically aligned states across the country. The law barred state entities from investing in or contracting with financial institutions that the Texas Comptroller determined to “boycott energy companies,” given the vital role of the energy sector to the state.

SB 13 defined boycotting as taking certain actions without an ordinary business purpose, such as “refusing to deal with” fossil fuel energy companies, ending business activities with such companies, or “otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with” such companies. Although the legislation included certain carveouts and exceptions, it resulted in several major financial institutions being deemed to “boycott energy companies,” thereby prohibiting those institutions from competing for state contracts or receiving investments from state funds."