Over the past year, the backlash against so-called ESG investing has swept through red states as legislatures enacted laws punishing investment firms that use environmental, social, and governance metrics in their decision making.
As the saying goes, it’s bigger in Texas.
After banning 10 ESG-friendly financial firms from doing business with the state last summer, right-wing lawmakers in Austin have set their sights on another, bigger target: the insurance industry. Republican lawmakers in the Texas House and Senate have introduced legislation to ban insurers from considering ESG scores as they establish insurance rates. If enacted and implemented, the law could boot some of the country’s best-known insurance brands from operating in Texas. Most big insurers—the Hartford, Allstate, and State Farm, to name a few—currently embrace ESG metrics.
The move would be a big blow for the industry, potentially beyond Texas. Insurance companies fear that restrictions on ESG considerations could hamper their ability to make sound decisions about policies they offer their customers given that environmental, social, and governance issues can represent real financial risks.