Texas Republicans Push Bills To Limit ESG Influence On Insurers In Defense Of Fossil Fuel Industry

In a bid to protect the thriving oil and gas industry in Texas, Republican lawmakers are expanding their fight against Environmental, Social, and Governance (ESG) policies beyond financial firms, targeting insurance companies as well.

One of the proposed bills seeks to limit ESG considerations when insurers set rates, while another aims to prevent Texas-based insurers from implementing shareholder proposals that curtail collaboration with fossil fuel companies or impose restrictions for environmental, social, or political objectives.

The focus on insurance comes on the heels of a 2021 Texas law penalizing financial companies engaged in fossil fuel boycotts, which has become a model adopted by Republican legislators across the country.

While insurance association representatives have raised concerns about potential unintended consequences, particularly regarding risk assessment practices like setting rates in hurricane zones or fire-prone areas, lawmakers have revised the bill impacting rate-setting to clarify that insurers can still use actuarial principles and consider relevant information, even if it overlaps with ESG factors.

The American Property Casualty Insurance Association remains opposed to the bill.

Another measure seeks to counter shareholder proposals perceived as politically motivated by activist investors. Under this measure, a Texas-based insurance company would be prohibited from implementing these proposals or including them in proxy statements. Supporters argue that these changes would safeguard insurance companies from shareholder proposals that do not align with their best interests.