Last week, it was reported that the Texas Attorney General would "not approve any public security" which was purchased or issued by a major bank due to alleged discrimination against the firearms sector. In 2021, Texas had enacted a law that sought to bar government contracts with entities that discriminated against the firearms industry--and it has now determined that a major bank has done so, and acted accordingly.

Texas has similarly enacted laws that prohibit state retirement funds from investing in companies that have been determined to boycott energy companies. In fact, in August 2022, the Texas Comptroller published a list of ten financial companies and approximately three hundred and fifty funds that all state government entities needed to divest from due to their alleged boycott of energy derived from fossil fuels. (

These efforts by Texas reflect the increasing impulse to politicize business and compel companies to adopt either pro-ESG or anti-ESG policies. The proliferation of state laws that seek to force companies to effectively abide by certain political principles has made navigating competing and parallel regulatory regimes increasingly fraught and difficult. Companies should carefully evaluate which state laws and regulations they are potentially subject to, and carefully analyze how to structure their operations so as to--if possible--avoid running afoul of this confusing thicket of state laws and regulations.

[A major bank] has discriminated against the firearms sector, the office of Texas Attorney General Ken Paxton said, making a decision that "has the effect" of Texas halting [its]ability to underwrite most municipal bond offerings in the state. Republicans have been ramping up pressure on the finance industry over environmental, social and governance (ESG) investment practices. Texas enacted a law in 2021 prohibiting government contracts with entities that discriminated against the firearms industry.