When the Texas state legislature originally debated its fossil fuel boycott bill, representatives from the State Comptroller's office pointed out an obvious issue: nobody had ever come up with a list of companies like this before. New documents obtained by the investigative reporting group Floodlight reveal just how much trouble the Lone Star State has had in trying to figure out who to stop working with. "I see this as just the next or one of many symbolic actions," says David Spence, a law professor at The University of Texas, Austin. They say that the climate risks to the financial system are so huge that there's no real way to stop financial firms from pricing them in - and going greener in the process.
They point to gaping loopholes in the legislation. By 2022, that number stood at $40.43 trillion.Įxperts are skeptical about the Texas law's chances of success. In 2014, there were some $52 billion dollars divested from fossil fuels worldwide, according to the Global Fossil Fuel Divestment Commitment Database. Last fall, a coalition of 15 treasurers from mostly Republican-led states published a letter saying they would stop banking with financial institutions engaged in "boycotting" fossil fuels.īut if the state boycotts are spreading, so too is the popularity of green investing. Since Texas passed its bill, at least seven other states have either considered or passed similar legislation. Last August, Texas hired MSCI, a financial ratings firm that analyzes green investments, to aid it in drawing up a list of which firms it should boycott, public records obtained by Floodlight show. Vehicles drive along Congress Avenue that leads to the Texas Capitol building in Austin. The law applies to new or existing contracts greater than $100,000. The funds are worth approximately $330 billion, though it's not clear how much of them is invested in companies Texas plans to boycott. The law bars Texas's state retirement and investment funds from doing business with companies that the State Comptroller says are "boycotting" fossil fuels. The new law was written by Jason Isaac, a former legislator whose foundation takes money from the fossil fuel industry. But when you're talking about the largest financial institutions.the global trends are going to be those that dictate a lot of this - and the state of Texas may maybe be out of sync with some of those global trends." A popularity contestįossil fuels help to power the Texas economy, employing some 14% of Texas workers in 2019, according to the American Petroleum Institute. "They can certainly sort of make a difference. "The state of Texas is a large state with a lot of money," says Rob Greer, associate professor in the Bush School of Government and Public Service at Texas A&M University. At least seven other states are now considering or have passed similar legislation, raising the prospect of a coalition of fossil fuel producing states putting pressure on Wall Street. Samuelrich says she plans to ignore the one she got.Įven so, Samuelrich says the law could have a "chilling effect" on some investment firms.ĭespite Texas's emerging problems in implementing the first law penalizing companies for fossil fuel divestment, the concept of boycotting green finance is spreading. "It felt very politically motivated," she says. Leslie Samuelrich, president of Green Century Capital Management, a fossil fuel-free mutual fund, says her firm recently received its letter. This March, the Texas State Comptroller began sending letters out to financial institutions, probing their climate policies. Loopholes and exceptions written into the law could sap its impact on financial firms that have aggressive climate policies. "This bill sent a strong message to both Washington and Wall Street that if you boycott Texas energy, then Texas will boycott you," Texas Representative Phil King said from the floor of the Texas legislature during deliberations on the bill, SB 13, last year.īut the Lone Star state is straining to implement the law.
Texas passed a law treating financial companies shunning fossil fuels the same way it treated companies that did business with Iran, or Sudan: boycott them. Last year, one state decided to push back. Now, Texas is the first state in the nation to pass anti-divestment laws for fossil fuels.įor years, fossil fuel producing states have watched investors shy away from companies causing the climate crisis. Fossil fuels power the Texas economy, accounting for some 14% of gross state product between 20.
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