88th LegislatureEnergyTexas Lawmaker to File Bill Prohibiting Banks from Boycotting Fossil Fuel Companies

The legislation would mirror a bill passed in 2021 that prohibited banks from refusing loans to gun manufacturers.
May 6, 2022
State Rep. Steve Toth (R-The Woodlands) announced Thursday that he’ll file legislation that would prohibit Texas banks from refusing to issue loans to fossil fuel companies.

“Banks and multinational investment corporations are cutting off financing to oil and gas companies,” said Toth. “It’s called ESG: Environmental, Social, and Governance, and investors are scoring companies by this criteria. What gets you a poor environmental score? Working in oil and gas. As members of the Net-Zero Banking Alliance, Wells Fargo, Bank of America, and Citi’s goal is to decarbonize their investment portfolios by 2050.”

The ESG score, which can vary based on the financial institution grading, influences which companies receive financing and how much they receive. The higher a company grades, the more financial underwriting is available to it from entities that adhere to the system. On the investment side, it means more asset managers, like BlackRock, will drive investments toward those high-graders. Even companies in Texas’ oil and gas industry are buying into it, but the weightiest proponents are those who control the purse strings.

Measures to prohibit financing for fossil fuel development are being proposed to public companies by their shareholders. This occurred recently at four large banks — Bank of America, Citigroup, Goldman Sachs, and Wells Fargo — and while each measure failed, the Texas Employee Retirement System (ERS), the state’s second-largest pension system, voted in favor of each.

ERS said the issue has been identified and will be resolved going forward, but it renewed a growing focus by the legislature on the issue of environmental policies influencing the business sector. It has also placed a spotlight on public funds flowing into companies with such policies, passing Senate Bill (SB) 13 last year.

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Toth mentioned the ERS incident in his announcement too, saying, “Get this: the Employees Retirement System, Texas’ state employee pension, just cast proxy votes for shareholder resolutions to stop financing for drilling.”

His proposed remedy, among others the legislature will likely pursue in some capacity, resembles legislation passed last year on a different issue.

When Citibank announced it would no longer underwrite loans for gun manufacturers, Texas passed SB 19, which requires any bank operating in the state to certify it does not discriminate against firearms producers.

Toth’s bill, titled the “Not Woke, Not Broke Act,” would establish the same requirement for oil and gas companies. His release states he is working with the conservative Texas Public Policy Foundation in drafting the legislation.

As environmentalists gain ground in the corporate world, pushing the envelope on what they call sustainability policies, Texas officials are mounting up opposition.

The legislature does not reconvene for the 88th legislative session until January, and once that nears, legislators will begin filing their official bills.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.