Austin, Texas – The U.S. District Court for the Western District of Texas has struck down Texas’ Senate Bill 13, known as the “business blacklist law.” SB 13 undermined the freedom to invest, penalizing private companies and state entities, including pension funds, that made sustainable investments and were perceived as “boycotting” fossil fuel companies.
The decision, which is the first of its kind, comes as part of an order granting summary judgment in ASBC v. Hagar, a lawsuit filed in 2024 by the American Sustainable Business Council (ASBC), acting on behalf of members including Etho Capital and Sphere for SB-13’s violation of the members’ free speech and association rights protected under the First and Fourteenth Amendments of the United States Constitution. ASBC is represented by Democracy Forward, Emery Celli Brinckerhoff Abady Ward & Maazel LLP, and Guerrero & Whittle PLLC in the suit.
“This is a massive win for sustainable businesses and investors, for responsible shareholders in Texas, and for freedom,” said David Levine, President and Co-Founder of the American Sustainable Business Council. “The court has affirmed what we’ve always known: you cannot punish businesses for their investment decisions or silence those who speak about climate risk. SB-13 cost Texans hundreds of millions of dollars, blacklisted responsible businesses, and hindered progress towards a more resilient economy. We are grateful the court has put an end to this detrimental law.”
SB-13, signed into law in 2021, was an anti-business law that barred state pension plans and the state’s permanent school fund from investing in – and requires them to divest from – financial companies that “boycott” fossil fuel companies. The law also barred public contracting at the state and local level with companies that “boycott” fossil fuel companies. The law reportedly cost the state nearly $700 million in lost economic activity and 3,000 lost full-time jobs according to the Texas Association of Business, and quickly caused $270 million in increased costs for banking and financial services.
“SB-13 was an unconstitutional attack on business that was bad for Texas – its citizens, taxpayers, workers, business owners, and pensions,” said Skye Perryman, President and CEO of Democracy Forward. “The court correctly saw through the state’s contradictory arguments and struck down a law that threatened the freedom to invest and punished speaking about the risks posed by fossil fuels, advocating for sustainable energy choices, and associating with like-minded organizations. We are so grateful for the courage of our client, the American Sustainable Business Council and its members, who took this challenge head-on. This is just the latest example that shows when ‘We the People’ fight to defend our freedoms, we win.”
The Democracy Forward legal team working on the case includes Rachel Fried, Victoria Nugent, and Skye Perryman.
The order for summary judgment issued today is available here.
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Democracy Forward Foundation is a national legal organization that advances democracy and social progress through litigation, policy, public education, and regulatory engagement. For more information, please visit www.democracyforward.org.
