Court Says Texas Cannot Punish Investors for Taking Climate Change into Consideration

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It is a most absurd thing — Republicans who insist that the we should be completely free and that people should be able to spend and try to make money however they wish somehow also decided that major investors cannot be allowed to look at matters of climate change, social responsibility, and corporate governance (ESG) when deciding which companies to invest in. Apparently, Republicans with enough power decided that pension funds should not be allowed to avoid investing in fossil fuel companies, for example. So much for freedom!

The whole thing has been so absurd that it’s hard to believe it’s reality. But that’s not the only topic that feels that way, so it has gotten left relatively undiscussed and ignored. Luckily, however, we do have people engaged in the legal fight over this for us, for humanity.

Good news on this matter is the fact that a court has now decided that Texas cannot ban pension funds and other public entities from taking ESG into account when deciding how to deploy investments. “On Wednesday, a federal court struck down Texas’ ‘anti-ESG’ law, declaring it unconstitutional and permanently barring the state from enforcing it. The law sought to prohibit pension funds and other public entities from investing in or contracting with financial firms deemed to be ‘boycotting’ fossil fuel companies,” the Sierra Club shares.

“In its ruling, the U.S. District Court found that Texas Senate Bill 13 violated the First and Fourteenth Amendments by imposing vague and overbroad restrictions that penalized protected expression and association, and by conditioning access to public investment and contracting on compliance with those restrictions.

“SB 13 was enacted in 2021 and relied on a state-maintained blacklist, becoming the first law in a broader wave of legislation aimed at restricting how financial institutions and public funds address climate-related considerations. Similar measures have since been introduced in dozens of states, several of which rely on comparable blacklisting mechanisms. By striking down the Texas statute, the court’s decision calls into question the durability of this approach and could have implications for other similar laws across the country.”

Thank goodness.

“This ruling makes clear that Texas politicians crossed a constitutional line by using blacklists and coercive penalties to target investor conduct and speech. The state’s unconstitutional actions distorted financial markets, raised costs for public entities, and punished firms for expressing views or engaging in activity related to climate change and fossil fuels,” Ben Cushing, Director of the Sierra Club’s Sustainable Finance Campaign, added.

“For public pension trustees and other long-term fiduciaries, the takeaway is that state oversight of investments should reinforce sound fiduciary judgment, not political punishment or vague prohibitions. Managing financial risks, including climate-related risks, is an essential part of responsible investing. This decision should give public officials across the country greater confidence to ensure investment strategies are grounded in the best long-term interests of pension beneficiaries, not political posturing.”

Indeed. Will common sense prevail?

Well, I guess it is a constant fight to try to help common sense prevail in a country with so much normalized nonsense.