• Atmospheric CO2 /Parts per Million /Annual Averages /Data Source: noaa.gov

  • 1980338.91ppm

  • 1981340.11ppm

  • 1982340.86ppm

  • 1983342.53ppm

  • 1984344.07ppm

  • 1985345.54ppm

  • 1986346.97ppm

  • 1987348.68ppm

  • 1988351.16ppm

  • 1989352.78ppm

  • 1990354.05ppm

  • 1991355.39ppm

  • 1992356.1ppm

  • 1993356.83ppm

  • 1994358.33ppm

  • 1995360.18ppm

  • 1996361.93ppm

  • 1997363.04ppm

  • 1998365.7ppm

  • 1999367.8ppm

  • 2000368.97ppm

  • 2001370.57ppm

  • 2002372.59ppm

  • 2003375.14ppm

  • 2004376.96ppm

  • 2005378.97ppm

  • 2006381.13ppm

  • 2007382.9ppm

  • 2008385.01ppm

  • 2009386.5ppm

  • 2010388.76ppm

  • 2011390.63ppm

  • 2012392.65ppm

  • 2013395.39ppm

  • 2014397.34ppm

  • 2015399.65ppm

  • 2016403.09ppm

  • 2017405.22ppm

  • 2018407.62ppm

  • 2019410.07ppm

  • 2020412.44ppm

  • 2021414.72ppm

  • 2022418.56ppm

News & Views

Will Texas divestment law derail net-zero efforts?

Big oil state's divestment law targets ESG

Content Tags: Divestment  Legal  U.S. 

A controversial divestment law in Texas could slow down efforts to tackle climate change in the US – but experts think it will be very difficult to enact in practice due to the law’s inconsistencies and misunderstanding of the energy transition.

In a shock political manoeuvre last year, the big oil state introduced a law effectively banning the state from contracting with or investing in companies that divest from oil, natural gas and coal companies.

This includes large financial firms including the likes of BlackRock and JPMorgan that manage the investments of Texas’s public pension funds and other funds.

In March 2022, 20 large asset managers received letters from Texas Comptroller Glenn Hegar asking whether they “boycott” energy firms, how they consider fossil fuel investments, and what they say in public statements but also do in practice.

The way the law is written gives the Texas Comptroller a lot of leeway in terms of how interpreting what the boycott means, leading to concerns over the scale of this legislation’s impact.

But Greg Hershman, head of US policy at the UN’s Principles for Responsible Investment (PRI), says there are loopholes and carve-outs and that “it's hard to see the teeth in this bill and how it would be workable”.

For example, one carve-out is that funds cannot follow this law if it would violate their fiduciary duties.

“But even so, a lot of the asset managers can just clarify some of their public statements and say, look, maybe you had interpreted this as boycotting but if we change a couple of words here and there, then it's clearly not. The broad language of the legislation is going to make this a very confusing situation for a lot of folks.”


I don't think the drafters of this bill or the folks pushing this legislation or similar legislation in other states truly believe that they'll fundamentally stop the consideration of ESG factors and investment decision-making.

Greg Hershman, head of US policy, Principles for Responsible Investment

Could slow climate action

However, Hershman is concerned it will create confusion and muddy the waters around what should be a straightforward consideration of information for investors and could cause people to pause their climate and ESG commitments.

“I don't think the drafters of this bill or the folks pushing this legislation or similar legislation in other states truly believe that they'll fundamentally stop the consideration of ESG factors and investment decision-making. The goal is to slow this down and essentially muddy the waters and try to create some confusion in the marketplace – and it's unfortunate because the asset managers are trying to do their day job and invest for the future for their clients and for the retirement of savers.”

Sarah Wilson, CEO of Minerva, agrees that the law will largely be unworkable in practice. She says “the law is riddled with conflicts and potential difficulties for implementation, and it is a misrepresentation of what ESG and the transition are all about”.

“It completely flies in the face of free market principles, and nobody is forcing Texas to buy a climate sensitive fund or an ESG fund,” she adds.

At the heart of the legislation is a very binary misunderstanding of the energy transition and how it is viewed by investors and asset managers.

As Wilson says: “There are lots of shareholders who do not believe in blanket divestment, because the energy transition is a long-term trend. There is currently no substitute for diesel, although lots of inventions are being developed.”

However, the legislation is not expected to have too big an effect on broader net-zero commitments.

“The weight of the money is not with Texas,” says Wilson. “The way to look at it this is that the rest of the world requires pension schemes to consider ESG and climate change. Are fund managers more likely to pay attention to one state in one country versus their entire franchise?”

The consideration of ESG and responsible investment is clearly quickly accelerating all around the globe but particularly in the US where the pace had previously been slower than in Europe and the UK. The PRI says it will soon reach 5,000 signatories globally, with 1,000 of these based in the US.

A divided nation

While other states are not expected to follow Texas’s extreme example, some states have introduced legislation banning ESG or launching inquiries, including Idaho, West Virginia, and Kansas. On the other hand, some Democrat states such as California are introducing legislation urging their state pension schemes to divest from fossil fuels.

This growing dichotomy between pro and anti-ESG rules across the US is expected to cause confusion and potentially derail efforts to tackle climate change.

Hersham is concerned that asset managers and investors are getting pulled into the politics of the energy transition.

He says: “This Texas divestment law puts asset managers in a strange position because they have a fiduciary duty to their clients. ESG disclosure and transparency is about providing investors with the most relevant information they need to discharge their fiduciary duty and attempts to politicise do not result in the best outcomes for investors at the end of the day.”

Content Tags: Divestment  Legal  U.S. 

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