Texas ESG Blacklisting Ruled Unconstitutional; Investors See Roadmap to Challenge Anti-ESG Laws

A Texas state judge struck down legislation blacklisting financial firms using environmental, social and governance (ESG) factors, ruling it violated First Amendment free-speech protections. The Energy Discrimination Elimination Act targeted BlackRock, HSBC and others, and about 14 states followed Texas' lead. The ruling provides a legal roadmap to challenge similar anti-ESG laws in Oklahoma, Kentucky, West Virginia, Tennessee and Utah, said K&L Gates attorney Lance Dial and U.S. Sustainable Investment Forum’s Bryan McGannon. Anti-ESG measures, including diversity provisions and lawsuits, have been proposed in 26 states, but 391 bills have been killed since 2022. insurers reported $224 billion in climate-related disaster damages in 2025, with Los Angeles wildfires costing $53 billion (of which $40 billion was insured). Despite the chilling effect of anti-ESG laws, the Texas decision is seen as a strong signal that managing climate-related financial risks is consistent with fiduciary duties.