Texas Comptroller Glenn Hegar announced a list of ten financial firms that are now banned from doing business with state entities in Texas. Hegar said those firms, which include BlackRock, Credit Suisse, UBS, and BNP Paribas, “boycott” the fossil fuel sector, which is illegal under a 2021 Texas state law.

Why should we care?
Texas used a single ESG risk-rating list, a ranking created by MSCI, to draft an initial list of 19 companies to ban, before whittling the blacklist down to 10. This arbitrary and subjective methodology drew serious blowback from financial institutions. According to the Financial Times, if Texas had used an ESG ranking compiled by Sustainalitics instead of that by MSCI, it may have banned Janus Henderson and Franklin Templeton instead of BlackRock; Citigroup and Bank of America may have ended up on the shortlist, too. “MSCI is a reliable and trusted company but it’s not the only one,” said Andrew Poreda, a senior ESG analyst at Sage Advisory Services. “Picking MSCI as the sole determinant of a company’s ESG score is arbitrary.” What this showdown proves is that, beyond ESG’s politicization by conservative states looking to prolong support for fossil fuels, there remains a fundamental first-principles disagreement over what ESG is. What are sustainable practices, and how do we measure and weigh them? Does prioritizing green energy count as a divestment from fossil fuels—or not? As long as those uncertainties remain, then both sides of this disagreement will leverage their version of facts to try and move beyond an impasse, while trying to gloss over overtly moral or ideological reasons for this ban to stay in place or be overturned.