Unlike California, Texas has a reputation for being a business-friendly state. Unfortunately, Texas is becoming more like California.
Whereas California legislators like to dictate what businesses can legally do, Texas legislators are increasingly dictating what businesses can’t do. California requires its pension funds to follow environmental and social governance (ESG) policies. Texas lawmakers are prohibiting insurance companies from following ESG policies. Pro-ESG and anti-ESG laws are simply flip sides of the same statist coin.
Statism holds that the individual (and by extension businesses) is subservient to the demands and dictates of the state. The decisions and desires of the individual are rendered irrelevant, because the decisions and desires of lawmakers reign supreme. And this is true whether legislators are prescribing or proscribing the actions of individuals and businesses.
ESG policies place environmental and social issues above financial return when making investing decisions. As an example, an investor following ESG would likely refrain from investing in fossil fuel companies. Investment decisions are based on one’s values. Some individuals value ESG more than the financial return, and they should be free to invest in companies with ESG policies. Both pro-ESG and anti-ESG laws replace the individual’s values with those of lawmakers.
Texas won’t retain its business-friendly status by becoming more like California. Instead of dictating what businesses can and cannot do, Texas lawmakers should be protecting the freedom of producers to act as they judge best.