A federal court has struck down a Texas law that barred state agencies from investing in or doing business with companies that take steps to reduce their dependence on fossil fuels. The ruling prevents the state from enforcing restrictions targeting environmental, social, and governance (ESG) criteria in investment and contracting decisions.
The law aimed to limit financial support for firms prioritizing sustainability efforts, but the court found it conflicted with federal regulations and legal standards. The decision allows state entities to continue engaging with companies based on ESG considerations without the constraints imposed by the Texas statute.
**Why this matters**
The ruling affects how states can regulate investments related to climate and sustainability goals. It highlights ongoing legal debates over the role of ESG factors in public finance and contracting. The outcome may influence similar laws in other states and shape the future of sustainable investing policies.
Source: NewsData