Comptroller Glenn Hegar called out a left-wing group for suing the state over a law restricting investments in environmental, social, and governance policies.
The law, Senate Bill 13, prevents the state government from entering contracts with firms that boycott reliable energy sources like oil and gas—a notable ESG policy.
On Thursday, the left-wing business group American Sustainable Business Coalition filed a lawsuit against Hegar and Attorney General Ken Paxton, alleging that the law violates the First and Fourteenth Amendments to the U.S. Constitution.
The group specifically accused the state of engaging in viewpoint discrimination and denying companies due process in enforcing the law, which was passed in 2021.
ASBC is asking the federal district court to declare the law’s most relevant sections unconstitutional and to permanently block the state from enforcing them.
“SB 13 bars certain state investments and contracts with companies that take ‘any action’ that is intended to penalize, harm, or simply limit commercial relations with fossil fuel companies and companies that rely on fossil fuels,” wrote the business group.
“The sweep of this provision is contrary to the First Amendment, which protects speech and other expressive activities, even if a government does not like the content of that expression,” they further alleged.
Hegar slammed ASBC’s claims shortly after the suit was officially submitted.
“The plaintiff has filed a purported First Amendment lawsuit that seeks to undermine state sovereignty and 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,” stated Hegar. “That is absurd.”
The comptroller further stated that Texas has taken a “very open, transparent, and methodical approach” to reining in the “radical environmental agenda” that groups like ASBC are trying to implement.
“The ink used to print this frivolous lawsuit is made by the very industry they are trying to eliminate,” continued Hegar, appending that “these groups continue to shove their radical agenda onto consumers and ignore the critical role this sector plays, and will continue to play, in our daily lives.”
Former State Rep. Jason Isaac, a senior fellow at the Texas Public Policy Foundation and CEO of the American Energy Institute, wrote in July that SB 13 and similar legislation meant to restrict the influence of ESG in government were working as intended.
Isaac told Texas Scorecard that he was a part of helping draft the measure that would eventually become SB 13 alongside Lt. Gov. Dan Patrick and state lawmakers.
“I’m thrilled to see progressives admit what we’ve known all along: ESG is a political agenda, nothing more,” said Isaac. “Far from improving our environment — and certainly not improving lives — boycotting fossil fuels leads only to a higher cost of living and vanishing investments.”
“I’m confident the constitutionality of this law will be upheld, and Texas will continue to protect pensioners from having their investments weaponized against responsible American energy producers,” he added.
Anti-ESG policies have already been effective in divesting state monies from some controversial firms, like the global asset manager BlackRock.
State Board of Education Chairman Aaron Kinsey announced in March that BlackRock was violating SB 13 and ordered the Permanent School Fund to divest $8.5 billion from the company.
Months later, a report in the Santa Clara Journal of International Law found that government policies—not the private sector—were the primary drivers behind ESG-related initiatives.
“In a level playing field, ESG-weighted portfolios struggle against market-tracking index funds, which provide better diversification and risk reduction,” wrote researchers Allen Mendenhall and Daniel Sutter.
