In a high-stakes legal battle that pits sustainable business principles against Texas energy policy, the American Sustainable Business Coalition has taken aim at one of the nation’s first “anti-ESG” laws, challenging what they call unconstitutional restrictions on corporate climate goals.
The coalition, representing more than 200,000 businesses including high-profile companies like Ben & Jerry’s, Seventh Generation, and Patagonia, filed a lawsuit against Texas Attorney General Ken Paxton and Comptroller Glenn Hegar in September 2024. At issue is Senate Bill 13, a 2021 law that prohibits state entities from investing in companies that “boycott” fossil fuel businesses and requires divestment from those that do.
The Battle Over Business Freedom
“Texas has long presented itself as a business-friendly state where limited state regulation facilitates the ability of businesses to conduct themselves as they see fit,” the lawsuit states. “Yet in 2021, the Legislature passed SB 13 to coerce and punish businesses that have articulated, publicized, or achieved goals to reduce reliance on fossil fuels.”
The legal challenge argues that SB 13 constitutes viewpoint discrimination and denies companies due process, violating both the First and Fourteenth Amendments. Texas has already blacklisted investment funds from climate-focused firms Etho Capital and Sphere, along with financial giants BlackRock, HSBC Holdings, and Credit Suisse.
The impact has been swift. Major financial institutions including JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America, and Fidelity have exited the Texas market rather than comply with the restrictions.
The ESG Battleground
What exactly is driving this conflict? SB 13 represents one front in a broader nationwide battle over Environmental, Social, and Governance (ESG) investing. Since 2023, lawmakers across the country have introduced 76 anti-ESG bills in 2024 alone, with 42 such measures passing in the past two years.
But the tide may be turning. In July 2024, an Oklahoma District Court judge permanently blocked a similar law that prohibited state contracts with firms that factored ESG considerations into investments.
Texas Comptroller Glenn Hegar has been defiant in response to the lawsuit. “It is ironic that this left-wing group suing Texas is hiding their true intent: to force companies to follow a radical environmental agenda that is often contrary to the interests of the shareholders,” Hegar declared.
Disputed Classifications
The Texas Comptroller has formally determined that 11 financial companies are boycotting the oil and gas industry under SB 13’s provisions. But some of those companies strongly dispute this characterization.
BlackRock, one of the world’s largest asset managers, has pushed back forcefully against its inclusion on Texas’s boycott list. “This is not a fact-based judgment. BlackRock does not boycott fossil fuels – investing over $100 billion in Texas energy companies on behalf of our clients proves that,” the company insisted.
The firm went further, questioning the state’s approach: “Elected and appointed public officials have a duty to act in the best interests of the people they serve. Politicizing state pension funds, restricting access to investments, and impacting the financial returns of retirees is not consistent with that duty.”
What’s Next?
The legal challenge now hangs in the balance. A hearing on motions to dismiss and for summary judgment was held in June 2025, with the court’s decision still pending.
Whatever the outcome, the case highlights a fundamental tension in American politics today: the collision between state policies aimed at protecting traditional industries and the growing corporate movement toward environmental sustainability. For Texas businesses caught in the middle, the stakes couldn’t be higher.
