According to the American Petroleum Institute, the fossil fuel industry employed nearly 15% of all workers in the state of Texas in 2019. Virtually all Texas legislators accept donations from fossil fuel businesses, and now they want to punish financial firms that offer green investment opportunities.
Last year, Texas lawmakers passed SB 13, a law that is ostensibly meant to penalize financial institutions engaged in "boycotts" against the fossil fuel industry by boycotting them in turn. However, in practice, even firms that do invest in fossil fuels may face trouble if they also carry fossil-fuel-free products.
Under SB 13, no state retirement or investment fund contracts of $100,000 or more can be made with the green institutions, and existing contracts are subject to the same rule. Texas' retirement and investment funds are worth roughly $330 billion, but it is currently unclear how much of that money is invested in the firms Texas plans to boycott.
"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 of SB 13.
There are exceptions in the bill for firms that decline to invest in fossil fuels for financial rather than moral or environmental reasons.
So far, the state has struggled to implement SB 13 thanks to its countless loopholes and the fact that nobody really knows which institutions should be penalized.
"This is not obvious, you're really going to have to do a lot of research," Sheri Greenberg, a former Democratic Texas state lawmaker, said.
In March of this year, the State Comptroller started requesting reports on climate policies from Texas financial firms, but at least some recipients have told reporters they plan on ignoring the request.
"The simple truth is that the creation of this list would present no challenge whatsoever if these companies were open, transparent and honest about their position on the fossil fuel sector," a comptroller's office spokesperson wrote in a statement.
An investigation by Floodlight also revealed that a firm Texas hired to analyze the green investments of other institutions should itself actually be barred from doing business with the state because of SB 13. To avoid any issues with the law, the state convinced the firm to drop its contract price from $100,000 to $95,000.
Despite the state's difficulties with implementation, green firms like Green Century Capital Management say the law will have a "chilling effect" on green investing.
"I see this as just the next or one of many symbolic actions," said David Spence, a law professor at The University of Texas.
While Texas hasn't had much luck carrying out SB 13, seven other states have begun developing their own versions of the law. Last year, 15 state treasurers, mostly from Republican states, wrote a letter effectively establishing the same boycott as Texas.
Fossil fuel-dependent states may hope to hold back the tide of green energy, but experts say that global trends are far more likely to impact the future of U.S. energy, and those trends are green. In 2022, $40.43 trillion was divested from fossil fuels around the globe, compared to just $52 billion in 2014.
"The state of Texas is a large state with a lot of money," said associate professor in the Bush School of Government and Public Service at Texas A&M University Rob Greer. "They can certainly sort of make a difference. But when you're talking about the largest financial institutions...the global trends are going to be those that dictate a lot of this - and the state of Texas may maybe be out of sync with some of those global trends."
