A measure aimed at further cracking down on the use of environmental, social, and governance (ESG) standards in corporate decision-making was defeated in the Texas House Judiciary and Civil Jurisprudence Committee, effectively ending the bill’s chances this session.
House Bill 872 by State Rep. Brian Harrison (R–Midlothian) would have shifted the legal burden of proof in certain shareholder lawsuits, requiring corporations accused of improperly considering ESG factors to prove their actions were in the company’s best interest.
ESG is a framework increasingly used by corporations and investors to evaluate companies based on non-financial factors. Environmental criteria look at how a company manages natural resources and its environmental impact. Social criteria examine how a company treats employees, customers, and the communities in which it operates. Governance refers to a company’s internal practices and policies, including board diversity, executive compensation, and shareholder rights.
Examples of ESG include implementing DEI and initiatives to reduce oil and gas usage.
Critics argue that ESG policies often prioritize progressive political goals over fiduciary responsibilities to shareholders.
The Republican Party of Texas has specifically targeted the use of ESG in its platform, describing it as part of the so-called “Great Reset” and calling for legislation to prohibit corporations and financial institutions from making decisions based on anything other than financial concerns.
The vote on HB 872 came late enough in the legislative session that the committee could have simply declined to take action. Instead, the committee formally voted down the bill by a 9–1 margin, with State Rep. Mike Schofield (R–Katy) the only vote in favor.
Harrison criticized House leadership for what he called a pattern of undermining conservative priorities.
“Texas voted for Trump, but House leadership has been advancing the Biden agenda all session by supporting DEI, transgender indoctrination, corporate welfare, and high taxes. So it’s unsurprising they are also protecting liberal ESG by killing my bill to help stop it in Texas,” Harrison told Texas Scorecard.
The legislative session is slated to end June 2.
