Title	Key Dates	Nature of Action	ESG Category	Summary
Texas Permanent School Fund Corporation (Texas PSF) implements proxy voting directives focused on fiduciary responsibility, not political activism	Adopted 4/15/2024	Enforcement / Divestment	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■ Texas PSF has announced that it has implemented an“ESG skeptical” proxy voting matrix, which is offered through Institutional Shareholder Services in response to “widespread criticism” that ISS voting policies supported too many ESG-linked shareholder resolutions. The new Texas PSF proxy voting matrix will take effect immediately and will be used to cast votes on behalf of Texas PSF during the first half of 2024. According to Texas PSF, ISS will produce a report for the Texas PSF to allow for an annual review to ensure that proxy votes comply with the matrix. ■ “The PSF is proud to step up and be a national leader on this issue,” said Tom Maynard, who chairs the Texas PSF board of directors. “We are committed to voting our shares in a manner that reflects Texas values and protects not only the assets under the stewardship of the PSF Corporation but also the mineral, oil and gas assets that create new capital to support Texas students.” Texas Comptroller of Public Accounts Glenn Hegar commended Texas PSF for its move to the “ESG skeptical” proxy voting policy, noting that “Texas is now one of the first states in the nation to have a major public investment vehicle take such action.”
Texas Permanent School Fund (PSF) Corporation Announces Termination of Investment Management Services contracts with BlackRock	Adopted 3/9/2024	Enforcement/Divestment	Target Entities That Boycott Certain Industries	■ The Texas Permanent School Fund Corporation terminated its $8.5 billion contract with BlackRock, accusing the company of boycotting fossil fuel energy producers, which make up a large part of Texas's economy. ■ Companies pushing anti-Texas policies and woke indoctrination have no place in Texas public education, whether in the classroom or as investments in Texas Permanent School Fund” said Tom Maynard, Chair, Texas PSF. “We will continue to defend our Texas values while generating more resources to support the school children of Texas.” This action, which furthers Texas PSF’s systematic divestiture from BlackRock, comes after the corporation adopted a new strategic asset allocation last month, which eliminated the increasingly volatile emerging market debt and equities and reduces exposure to non-U.S. equity areas in which BlackRock was providing investment management services. The impacted contracts represent about $8.5 billion in assets.
Texas AG Blocks Citigroup Participation in Domestic Bond Offerings	Adopted 1/19/2023	Attorney General Position	Target Entities That Boycott Certain Industries	■ After determining that Citigroup had discriminated against the firearms sector, Texas Attorney General Ken Paxton declared that he would not approve any public security issued on or after January 18, 2023, in which Citigroup purchased or underwrote a public security.
Financial Services Firms Subpoenaed by Texas Senate Panel Over ESG Issues	Adopted and in effect 11/22/2022	Enforcement / Divestment	Target Entities That Boycott Certain Industries	■ The Texas Senate Committee on State Affairs subpoenaed BlackRock, Vanguard, State Street and ISS to interrogate their position on ESG policies. The Committee also requested documents to evaluate how the financial services firms’ practices affect the state’s public pensions. ■ At the hearing, a BlackRock Senior Managing Director stated that BlackRock has maintained its independence from groups like the Net Zero Asset Managers initiative: “[BlackRock has] one bias, and that’s to get the best risk-adjusted returns for our clients.” The global chief investment officer for State Street Global Advisors testified that “[State Street is] not telling companies what to do, just informing them of potential climate related risks.”
Teacher Retirement System Adopts Formal ESG Policy	Adopted 9/16/2021	IPS Revisions	Promote ESG Factors in Investment and/or Proxy Voting Decisions	■ Applies to the Teacher Retirement System of Texas. ■ Directs the Investment Division to consider ESG factors that are material to long-term returns and levels of risk (Investment Policy Statement §1.5).
SB13: Relating to State Contracts with and Investments in Certain Companies that Boycott Energy Companies	Effective date 9/1/2021 Adopted 6/14/2021 Introduced 3/11/2021	Legislation	Target Entities That Boycott Certain Industries	INVESTMENT/DIVESTMENT ■ Applies to the Employees Retirement System of Texas, the Teacher Retirement System of Texas, the Texas Municipal Retirement System, the Texas County and District Retirement System, the Texas Emergency Services Retirement System and the permanent school fund. ■ Requires the Comptroller to maintain a list of financial companies that boycott energy companies. ■ Prohibits investment in listed companies. Requires divestment within 360 days from listed companies that do not cease their boycott within 90 days of receiving notice of the state entity's intention to divest. ■ Does not apply to indirect holdings in actively or passively managed investment funds or private equity funds, but requires the state entity to request that the fund managers remove listed companies from the funds or create similar funds without holdings in these companies. CONTRACTS ■ Prohibits state governmental entities from entering into a contract with a company for goods or services worth at least $100,000 and paid at least partly from public funds unless the company verifies in writing that it does not boycott energy companies and will not do so during the contract term. Only applies to companies with at least 10 full-time employees. SUBSEQUENT DEVELOPMENTS Divestment Statute Lists including: Financial Companies that Boycott Energy Companies — Updated October 2023 List of Financial Companies that Boycott Energy Companies FAQ — Updated October 2023 Companies that Boycott Israel (XLSX) — Updated October 2023 Designated Foreign Terrorist Organizations (XLSX) — Updated June 2023 Scrutinized Companies with ties to Foreign Terrorist Organizations (XLSX) — Updated June 2023 Scrutinized Companies with ties to Iran (XLSX) — Updated December 2, 2022 Scrutinized Companies with ties to Sudan (XLSX) — Updated December 2, 2022 Texas green energy probe threatens banks’ muni deals in state — Updated December 20, 2023 On October 17, 2023, Attorney General Ken Paxton Issues Enforcement Guidance For State Laws Prohibiting Public Contracts with Companies Unlawfully Maintaining "ESG" Policies. The letter advises that it is the responsibility of all governmental entities to exercise due diligence to uphold both the letter and spirit of state law, including exercising their own due diligence and monitoring compliance with relevant government code chapters upon contract formation and any renewal or extension of the contract’s term.
SB19: Relating to Prohibited Contracts with Companies that Discriminate Against the Firearm or Ammunition Industries	Effective date 9/1/2021 Adopted 6/14/2021 Introduced 3/3/2021	Legislation	Target Entities That Boycott Certain Industries	■ Prohibits state governmental entities from entering into a contract with a company for the purchase of goods or services worth at least $100,000 and paid at least partly from public funds unless the company verifies in writing that it does not boycott firearm entities or firearm trade associations and will not do so during the contract term. Only applies to companies with at least 10 full-time employees. SUBSEQUENT DEVELOPMENTS HB1092, which was introduced on 3/2/2023 and which failed to pass, would have repealed SB19 and its prohibitions on state governmental entities from entering into certain contracts with companies that do not verify that they do not and will not boycott firearm entities. On October 17, 2023, Attorney General Ken Paxton Issues Enforcement Guidance For State Laws Prohibiting Public Contracts with Companies Unlawfully Maintaining "ESG" Policies. The letter advises that it is the responsibility of all governmental entities to exercise due diligence to uphold both the letter and spirit of state law, including exercising their own due diligence and monitoring compliance with relevant government code chapters upon contract formation and any renewal or extension of the contract’s term.

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Past/Inactive Legislation

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