Texas Not Forced To Fund ‘Corporate Activism,’ Group Tells Appeals Court
The Liberty Justice Center has stepped into a legal battle over how Texas invests its pension funds, arguing that while corporations have a right to their political views, they don’t have a right to a taxpayer-funded paycheck to promote them.
On Monday, the legal nonprofit filed an amicus brief with the U.S. Court of Appeals for the Fifth Circuit in the case of American Sustainable Business Council v. Hegar.
The move asks the court to overturn a previous district court ruling that stopped Texas from pulling its money out of companies that boycott the state’s massive oil and gas industry.
At the heart of the fight is a Texas law that requires state pension funds to divest from companies using “environmental, social, and corporate governance” (ESG) standards to target fossil fuels. A lower court recently blocked the law, claiming it violated the First Amendment rights of those corporations.
The Liberty Justice Center argues that the lower court got the Constitution backward.
“We all have a right to invest our money in causes we believe in,” said Reilly Stephens, Senior Counsel and Director of Amicus Practice at the Liberty Justice Center. “But the corollary is that no one else is required to fund that cause for you—certainly not taxpayers, who should be free to decline to invest in causes they oppose.”
In its brief, the group points to decades of Supreme Court history, noting that the government generally has the power to choose what it funds. They argue that choosing not to invest in a specific company isn’t “censorship,” but rather a management decision regarding state property.
The group also raised concerns about international influence, suggesting that many ESG mandates are actually driven by European Union regulations.
By forcing Texas to keep its money in these companies, the group warns that the court is essentially allowing foreign standards to dictate American financial policy and “empowering foreign censors.”
The case now rests with the Fifth Circuit, where Texas is looking to regain the authority to manage its own investments without being tied to partisan corporate movements. As the brief concludes, the Constitution requires the government to stay neutral—not to be “forced to fund speech it finds detrimental to the public interest.”