Texas law places trading limits on companies that don’t invest in oil and gas

HOUSTON, TX (KTRK) — If a financial company does not invest in oil and gas, it cannot do business with the state of Texas. It’s a law passed in the last legislative session and it targets companies that the state defines as boycotting oil and gas. Even so, some suggest it’s little more than playing politics in an election year.

Oil and gas is a financial mainstay in Texas. More than 200,000 Texans make their living in the industry, and the Republican-led Legislature passed legislation to help protect those jobs and that part of the energy industry.

“This law was a way for Republicans in Texas to show that they were on the side of the oil and natural gas industry, which is one of the most important industries in Texas,” said Mark Jones, member Baker Institute policy. “The real purpose of this law was to signal to the voters of Texas, as well as the citizens of the country, that the State of Texas was going to fight for the oil and natural gas industry and the jobs and incomes that she represents for the state of Texas.”

The law prohibits any state entity, including pension funds, from doing business with a financial company or bank that boycotts oil and gas.

Specifically, it targets companies that practice what is called environmental and social governance, an investment selection process based on company policies and which encourages companies to act responsibly.

State Comptroller Glen Hegar’s office compiled a list that currently includes 10 companies that are no longer allowed to do business with the state.

“You have a substantial bias against investing in the oil and gas industry,” Hegar told ABC13, “and as listeners know in the Houston area, it’s an important part of not only the economy of Houston, of the Texas economy, but really of the global economy.”

Katie Mehnert, CEO of ALLY Energy, says the law is child’s play.

“My view is that it’s political convenience,” she said. “Government has no role to play in that, especially in state government and especially in our state where energy, and all energy, matters. So fossil fuels are important to the economy, so is renewable energy. And Texas is leading the way.”

Although the state makes exceptions if the decision would unnecessarily harm an agency or pension, the head of the Texas branch of the American Federation of Teachers, Zeph Capo, doesn’t like the trend.

“This short-term thinking is really very concerning for retirees,” Capo said. “People who depend on pension systems to make the best fiduciary decisions.”

Hegar defends the practice as essential to Texas’ future.

“If you don’t invest in oil and gas, a lot of the fabric, the basics of everyday life that we operate on, whatever industry you work in and who you really work for, those things go downhill,” Hegar said.

The list is fluid. It can change as frequently as quarterly. And more discussion on the issue is expected in the next session, which begins in January.

For updates on this story, follow Tom Abrahams on Facebook, Twitter and Instagram.

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