Texas’ fight against environmental, social and governance (ESG) policies could be hurting the state’s reputation with investors, as officials have already banned some of the biggest asset managers because they prioritize ESG.
In an op-ed for the Dallas Morning News, Sarah Stogner, elected district attorney for Loving, Reeves, and Ward counties, wrote that influential Texas officials are in a crusade against companies that consider ESG considerations, sacrificing the state’s reputation of “good for business.”
“For a state that touts being ‘good for business,’ Texas is sacrificing its reputation by using the heavy hand of government to force investment into oil wells owned by a group with lots of political influence: the owners of the least-producing, highest-polluting oil wells,” Stonger wrote.
She noted that 80% of Texas’ oil wells are at the end of its economically useful life These wells, known as “stripper wells” only produce less than 10 barrels of oil per day and are extremely polluting, being responsible for half of the industry’s leaked methane pollution, despite accounting only 8% of all oil and gas output.
Because of this, some of the biggest investor firms have not prioritized these low-performing and costly wells. However, Texas officials have charged companies with RSG consideration, banning them from doing businesses with state and local governments and barring them from state pension funds, limiting competition and driving up costs.
Some of the companies in the blacklist have, in fact, invested in Texas oil companies. According to Bloomberg, asset-management giants such as BlackRock and Invesco are in the blacklist despite investing more than $5 billion directly in the oil and gas industry.
Bloomberg reported that Republicans are attacking these giants saying they are “woke” or that they are “boycotting” the oil and gas industry. Overall, two thirds of the companies on the blacklist have more than $13 billion invested in Texas-based companies, such as Tesla Inc. and Waste Management Inc.
The list was published last year by Comptroller Glenn Hegar, part of a Republican national effort against ESG investment. In addition, Texas also punishes Wall Street firms for restricting businesses with the firearms industry.
“By blacklisting many of the best-performing financial firms, state lawmakers reduced competition and left Texas counties fewer options when it came time to issue bonds,” Stogner wrote.
“The major energy companies understand that reducing methane emissions is critical to keeping the industry competitive as the global market for gas raises standards on pollution,” she added. “Texas lawmakers are actually undermining the industry’s efforts to remain competitive by forcing Texas pension holders to underwrite the worst-polluting wells. At a time when the United States, led by Texas, is producing more oil than ever before in history, politicians shouldn’t be forcing Texas taxpayers and pension holders to pay a penalty for the benefit of marginal oil producers.”
Other analysts have said that Texas is hurting its reputation of good for businesses.
“Policies that block responsible investing hurt the economy, and now we see they can’t be executed,” Kyle Herrig, spokesperson for Unlocking America’s Future, a left-leaning political group, told Bloomberg. “Texas wanted to pave the way for other states to attack ESG, but they’ve just shown the nation their plan is a failure and, in the process, damaged their reputation as a state that’s good for business.”
