The Texas Attorney General's Office released an advisory letter providing updated guidance on enforcement of legislation passed by the Texas Legislature that prohibits government entities from awarding large contracts to companies maintaining certain ESG-related policies. The laws specifically target companies that boycott energy companies, discriminate against firearm entities or associations, or participate in boycotts against Israel.
The enforcement guidance comes as Texas continues its broader campaign against environmental, social, and governance (ESG) investing principles that state officials argue harm the state's energy sector and infringe on constitutional rights. The legislation requires government entities to verify that potential contractors do not maintain policies that could run afoul of the state's anti-boycott statutes before entering into significant contracts.
Under the guidance, state and local government entities must ensure compliance with multiple statutory provisions when evaluating contractors. The laws apply to contracts of substantial value and require verification procedures to ensure contractors do not maintain prohibited boycott policies. Violations could result in contract termination and potential legal action.
The advisory represents the latest development in Texas's multi-pronged approach to challenging ESG policies, which has included divesting state pension funds from companies deemed to boycott fossil fuel industries and implementing contractor verification requirements. The state has positioned itself as a leader in the national pushback against ESG investing practices.
The enforcement guidance does not include direct quotes from Attorney General Paxton, but the advisory letter provides specific implementation instructions for government entities subject to the contracting restrictions.
Government entities must now implement the updated guidance in their contracting processes, with potential legal consequences for non-compliance. The move signals Texas's continued commitment to using its contracting power to oppose ESG policies that state officials view as discriminatory against key Texas industries.