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Texas is banning state and local government agencies from doing business with financial firms that they say are, quote, "boycotting the gun and fossil fuel industries." It's a move other Republican-led states are following. But experts say the shift in Texas is already costing taxpayers hundreds of millions of dollars. Texas Public Radio's David Martin Davies reports.
DAVID MARTIN DAVIES, BYLINE: Republican Texas State Representative Phil King introduced his bill a year ago last April, saying it would stop 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 in mind - 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.
DAVIES: 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 Representative Giovanni Capriglione, this one aimed at firms divesting from the gun industry.
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GIOVANNI CAPRIGLIONE: I'm here to speak to you today about House Bill 2558, which prevents firearm lending discrimination by banks. This bill is supported by the National Shooting Sports Foundation and the National Rifle Association.
DAVIES: Capriglione argued cutting off capital and banking services to the gun industry threatens the Second Amendment. Both of these bills passed, and Texas Governor Greg Abbott signed them into law. They're aimed at ESG, or environmental, social and governance, policies. These are policies, companies say, that are good business because they address the risk they face from things like climate change. But Texas Comptroller Glenn Hegar called ESGs an opaque and perverse system where financial companies use their clout to push a social and political agenda. Last week, Hegar banned 10 firms from doing business with Texas after he determined they did not support the fossil fuel industry enough, including BlackRock, Goldman Sachs and JPMorgan.
DANIEL GARRETT: The result is it's costing 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 municipal bond borrowing. He says the top five lenders left the Texas municipal bond market because they wouldn't support the manufacturing of AR-15-style weapons, the kind 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 over.
DAVIES: Garrett estimates the Texas laws have reduced competition and cost Texas taxpayers an extra 300- to $500 million so far this year in extra interest. Still, those firms are sticking with their ESG policies.
For NPR News, I'm David Martin Davies in San Antonio. Transcript provided by NPR, Copyright NPR.
