SB 13: Texas Requires State Entities to Divest from Companies that Boycott Fossil Fuel Companies
Summary
Enacted in June 2021, SB 13 requires state entities to divest from financial companies that boycott the oil and gas industry. It requires the comptroller to prepare, annually update, and distribute a list of all financial companies that boycott energy companies. The state entity must divest at least 50% of the assets of a listed financial company within 180 days of the financial company receiving notice and 100% of the assets within 360 days. However, the law exempts agencies from divesting in boycotting companies if doing so would conflict with the agency's fiduciary duty. The law exempts indirect holdings in actively or passively managed investment or private equity funds. The law also prohibits state entities from entering into a contract with a company for goods or services unless the contract contains a written certification that the company does not and will not boycott energy companies.
The law defines "boycott energy company" to mean, "without an ordinary business purpose, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with a company because the company" engages in the fossil fuel industry or fails to commit to environmental standards.
