Texas law bars Wall Street firms from operating in the state if they stop investing in firearms and fossil fuels. Analysis shows it has cost taxpayers hundreds of millions of dollars this year.
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Texas bans state and local government agencies from doing business with financial firms that they say, and I quote, “boycott the manufacture of guns and fossil fuels.” It’s a move other Republican-led states are following. But experts say the change in Texas is already costing taxpayers hundreds of millions of dollars. Texas Public Radio’s David Martin Davis reports.
DAVID MARTIN DAVIS, AUTHOR: Texas Republican Rep. Phil King introduced his bill a year ago last April, saying it would prevent Wall Street firms from discriminating against the fossil fuel industry.
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PHIL KING: Wealthy investment managers are denying capital to energy companies, wielding their money and power with one simple goal: destroying the oil and gas industry. This bill sends a strong message to both Washington and Wall Street that if you boycott Texas Energy, then Texas will boycott you.
DAVIS: King’s bill prohibits Texas agencies from investing in companies that choose not to invest in fossil fuel companies because of the financial cost of climate change. Minutes later, the same committee heard a proposal for a similar bill from state Rep. Giovanni Capriglione, one aimed at companies divesting from the gun industry.
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GIOVANNI CAPRIGLIONE: I’m here to talk to you today about House Bill 2558, which would prevent discrimination in the lending of firearms by banks. This bill is supported by the National Shooting Sports Foundation and the National Rifle Association.
DAVIES: Capriglione argues that cutting off capital and banking services for the gun industry threatens the Second Amendment. Both bills passed and Texas Governor Greg Abbott signed them into law. They focus on ESG or environmental, social and governance policies. Companies say these are policies that are good business because they address the risk they face from things like climate change. But Texas Comptroller Glenn Hegar called ESG an opaque and perverse system where financial companies use their influence to push social and political agendas. Last week, Hegar barred 10 firms from doing business with Texas after deciding they did not support the fossil fuel industry enough, including BlackRock, Goldman Sachs and JPMorgan.
DANIEL GARRETT: The result is that it costs the Texans.
DAVIES: Daniel Garrett of the Wharton School at the University of Pennsylvania studied the impact of Texas’ anti-ESG laws on the state’s borrowing of municipal bonds. He says the five largest lenders left the Texas municipal bond market because they would not support the production of AR-15-style weapons, the type of gun used in the Uvalde school massacre.
GARRETT: The banks definitely think they’re having an impact. They think these policies are worth leaving Texas for.
DAVIES: Garrett estimates that the Texas laws have reduced competition and cost Texas taxpayers an additional $300 million to $500 million so far this year in additional interest. Still, these firms stick to their ESG policies.
For NPR News, I’m David Martin Davis in San Antonio.
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