Fossil fuels power the Texas economy, accounting for some 14% of gross state product between 2019 and 2020. Now, Texas is the first state in the nation to pass anti-divestment laws for fossil fuels.
Gregory Bull/AP
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Gregory Bull/AP
For years, fossil fuel producing states have watched investors shy away from companies causing the climate crisis. Last year, one state decided to push back.
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.
“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.
But the Lone Star state is straining to implement the law. Loopholes and exceptions written into the law could sap its impact on financial firms that have aggressive climate policies.
This March, the Texas State Comptroller began sending letters out to financial institutions, probing their climate policies. Leslie Samuelrich, president of Green Century Capital Management, a fossil fuel-free mutual fund, says her firm recently received its letter.
“It felt very politically motivated,” she says. Samuelrich says she plans to ignore the one she got.
Even so, Samuelrich says the law could have a “chilling effect” on some investment firms.
Despite Texas’s emerging problems in implementing the first law penalizing companies for fossil fuel divestment, the concept of boycotting green finance is spreading. 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.
“The state of Texas is a large state with a lot of