On Thursday, August 28, 2024, the American Sustainable Business Council (ASBC) sued Texas on behalf of members, including Etho Capital and Sphere, for violating the free speech and association rights protected under the First and Fourteenth Amendments of the United States Constitution through the implementation of SB-13—a law that penalizes investors that choose not to make risky investments in fossil fuel companies and businesses that choose not to pursue practices and products that are fossil-fuel reliant.
SB-13 prohibits state investments and contracts with companies that advocate for reductions in reliance on fossil fuels. The lawsuit, filed in the Western District of Texas’ Austin Division, argues that SB-13 discriminates against companies that use environmental, social, and governance (ESG) metrics in their investing and business practices. The law harms businesses that use ESG metrics and everyday Texans, and it also substantially harms Texas taxpayers, workers, business owners, and pensioners.
With the negative impacts of climate change rapidly unfolding before our eyes and businesses and consumers more concerned for the welfare of people and the planet than ever before, this anti-business law (SB-13), which prohibits state investments and contracts with companies advocating for reductions in reliance on fossil fuels, must be challenged.
Businesses need the freedom to operate responsibly. Without options, businesses are vulnerable to challenges that could be prevented through responsible operations. The ability to choose how to respond to challenges and operate responsibly is inseparably linked to a company’s financial pursuits. Responsible businesses and investors seeking to make wise decisions about how and what they invest in is not an impediment to financial success; rather, it is integral to long-term viability.
