In a significant legal move, the American Sustainable Business Network (ASBN), representing sustainable investment groups such as Etho Capital and Sphere, has filed a lawsuit against the state of Texas. The challenge targets SB-13, a law that penalizes private companies for avoiding risky fossil fuel investments. The ASBN argues that it violates the free speech and association rights protected by the U.S. Constitution.
Why This Matters
While this lawsuit targets a Texas law, the implications reach far beyond state lines. As businesses across the U.S., including those in Ohio, increasingly adopt environmental, social, and governance (ESG) practices to promote sustainability and long-term economic growth, legislation like SB-13 represents the current threat to responsible business practices nationwide.
If other states were to follow Texas’ example, companies in Ohio could face similar restrictions, harming their ability to invest sustainably and the state’s economy and workers. Ensuring businesses retain the freedom to make responsible investment choices without government interference is critical for building a resilient, inclusive economy in Ohio.
SB-13: A Setback for Responsible Investing
SB-13, enacted in Texas, prohibits state investments and contracts with companies that advocate for reducing reliance on fossil fuels. This law explicitly targets businesses incorporating ESG metrics into their decision-making. The lawsuit in the Western District of Texas contends that SB-13 unfairly discriminates against businesses committed to responsible investing and imposes financial harm on Texas taxpayers, companies, workers, and pensioners.
A Coalition Stands for Business Rights
David Levine, President and Cofounder of ASBN, condemned SB-13 as a poor policy and a violation of constitutional rights. “SB-13 is an unconstitutional attack that stifles free speech and punishes businesses for prioritizing responsible investments,” said Levine.
Echoing Levine’s concerns, Amberjae Freeman, CEO of Etho Capital, emphasized the law’s negative impact on Texas’ economic progress. “SB-13 is costing Texans millions and hindering progress towards a more resilient and inclusive economy,” Freeman said, urging to end this harmful legislation.
Alexandra Wright-Gladstein, Founder and CEO of Sphere, added that the law is counterproductive for those planning for retirement, as it limits access to investment options that consider climate risks.
Legal Support for Sustainable Business
Democracy Forward and prominent legal firms, including Emery Celli Abady Brinckerhoff Ward & Maazel LLP and Guerrero & Whittle PLLC, support the lawsuit. Skye Perryman, President and CEO of Democracy Forward, called for the repeal of SB-13, asserting that Texas businesses and taxpayers would benefit from a more balanced and forward-thinking approach.
The Broader Fight for Sustainable Business Practices
At the Ohio Sustainable Business Council, we closely follow this case as it could have ramifications for businesses nationwide. Policies like SB-13 stifle economic innovation and discourage responsible business practices that benefit people and the planet. Ohio businesses deserve the freedom to invest sustainably without fear of government penalties.
The plaintiffs in this case seek a federal ruling to declare SB-13 unconstitutional and unenforceable, marking an important step in defending responsible business practices and sustainable investing.
For more information on this lawsuit and other developments in sustainable business, visit the ASBN Website
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