INSTITUTE INDEX: State bans on financial firms' fossil-fuel boycotts cost taxpayers
Kentucky state Sen. Robby Mills (R) was the primary sponsor of a bill to punish financial companies that halt investments in oil, gas, and coal by barring them from receiving state contracts or managing state funds — and he got an award from the Kentucky Coal Association when it passed. A new analysis shows how much such laws, which have been adopted in a number of states in the South and nationwide, will cost taxpayers by reducing competition among municipal bond underwriters. (Official photo.)
Year in which the American Legislative Exchange Council (ALEC) — a pay-to-play group that connects right-wing state lawmakers and corporate interests to write and promote model legislation — adopted a model bill called the Energy Discrimination Elimination Act to punish financial companies that halt investments in oil, gas, and coal by barring them from receiving state contracts or managing state funds: 2021
Year in which the Texas legislature passed the ALEC model bill into law, the first state to do so: 2021
Of the Texas law's seven authors, number who are members of ALEC, which gets funding from fossil-fuel interests including Exxon Mobil, Koch Industries, and the American Petroleum Institute: 6
Year in which the West Virginia and Kentucky legislatures also passed versions of the model bill into law: 2022
Number of financial companies that were on the Kentucky state treasurer's initial list, released last month, of those determined to be involved in prohibited boycotts due to so-called "ESG" (environmental, social, and corporate governance) policies — including the firms BlackRock, Citigroup, and JPMorgan Chase: 11
Number of days Kentucky gave the listed companies to end their boycott or be subject to divestment of state funds: 90
Number of months after the Kentucky bill became law that its primary sponsor, Sen. Robby Mills (R), the ALEC state chair, received an award from the Kentucky Coal Association for his work to pass it: 6
Total number of states where lawmakers have passed or introduced legislation based on ALEC's anti-ESG model bill — part of a broader assault on ESG policies that includes executive actions by governors, state treasurers, and attorneys general: more than 12
Year in which Wharton Business School professor Daniel Garrett and Federal Reserve economist Ivan Ivanov published a study that estimated the increased cost to Texas entities following the passage of the anti-ESG law, which forced five of the largest municipal bond underwriters out of the state: 2022
According to that study, additional interest costs the state's municipal bond issuers incurred in the first eight months after the Texas law was enacted due to less underwriter competition: $300 million to $500 million
According to another study that applied a similar analysis to six other states, additional 2022 interest costs for bonds issued in West Virginia because of its anti-ESG law: $9 million to $29 million
Additional interest costs for bonds issued in Kentucky: $26 million to $70 million
In Louisiana: $51 million to $131 million
In Florida: $97 million to $361 million
(Click on figure to go to source.)
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Sue Sturgis
Sue is the editorial director of Facing South and the Institute for Southern Studies.