The American Sustainable Business Council (ASBC), based in Austin, Texas, has filed a lawsuit against the state, challenging the constitutionality of Texas Senate Bill 13 (SB-13). The law penalizes companies that avoid investing in fossil fuels by prohibiting state investments and contracts with such businesses. ASBC argues that SB-13 violates the First and Fourteenth Amendments by restricting free speech and association rights.
The lawsuit, filed in the Western District of Texas, Austin Division, asserts that SB-13 unfairly targets companies employing environmental, social, and governance (ESG) metrics in their business practices. These metrics often include sustainability efforts like recycling and waste reduction, which are integral to ESG programs aimed at lowering carbon emissions.
ASBC claims that SB-13 negatively impacts not only businesses but also Texas taxpayers, workers, and pensioners. The lawsuit seeks to have the law declared unconstitutional and unenforceable, arguing that it stifles responsible investments and economic innovation.
David Levine, ASBC’s president, emphasized that SB-13 is an unconstitutional policy that punishes businesses for prioritizing sustainable investments. Amberjae Freeman, CEO of Etho Capital, one of the companies represented by ASBC, added that the law hinders economic growth and costs Texans millions. Alexandra Wright-Gladstein, CEO of Sphere, another represented company, criticized the law for limiting investment options and harming the state.
The case, ASBC v. Hegar, highlights the broader conflict between state legislation and corporate governance focused on sustainability.
