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State Anti-ESG / Anti-Boycott Laws (Arkansas HB 1307 and Similar)

  • Type: State legislation — wave of laws passed 2021–2024
  • Key examples: Arkansas HB 1307 (2023), West Virginia SB 262 (2022), Kentucky HB 236 (2022), Oklahoma SB 1060 (2022), Indiana SB 7 (2023), North Dakota SB 2291 (2023), and others
  • Modeled on: Texas SB 13 (2021) and Texas HB 89 (anti-BDS)

What These Laws Do​

Following the Texas template, more than 20 states have passed laws prohibiting their state governments, pension funds, and procurement agencies from doing business with financial companies that apply ESG (Environmental, Social, and Governance) criteria in ways deemed hostile to specific industries — primarily fossil fuels, firearms manufacturers, and agriculture.

Arkansas HB 1307 (2023):

  • Prohibits state entities from contracting with financial institutions that "boycott" fossil fuel, firearms, or agriculture companies.
  • Requires certification of non-boycott compliance as a condition of state contracts.
  • Passed Arkansas House 72–19; Senate 26–5; signed by Governor Sarah Huckabee Sanders.

West Virginia SB 262 (2022):

  • State Treasurer maintains a "restricted financial institution" list of companies boycotting fossil fuels.
  • State agencies may not deposit funds in or do business with listed companies.
  • Signed by Governor Jim Justice.

Kentucky HB 236 (2022):

  • Similar structure to West Virginia — Treasurer maintains a boycott list for energy companies.
  • State investment funds must divest from listed entities.

Oklahoma SB 1060 (2022):

  • State pension funds cannot contract with financial institutions on the boycott list.
  • Signed by Governor Kevin Stitt.

Why Critics Oppose Them​

  • Government punishing boycotts as political speech — Economic boycotts are a recognized form of protected political expression under First Amendment doctrine going back to NAACP v. Claiborne Hardware Co. (1982). These laws penalize that expression when directed at politically favored industries.
  • Same mechanism as anti-BDS laws — The structure is identical to state anti-BDS laws that penalize boycotts of Israel. The hypocrisy of supporting both sets of laws simultaneously is a useful screen.
  • Fiduciary harm to state pensioners — Restricting what financial analysis pension managers may use is not a neutral investment policy — it is political interference in the management of retirement funds belonging to teachers, police officers, and state employees.
  • Financial costs documented — Goldman Sachs, JPMorgan, and other firms have withdrawn from or raised costs for bond underwriting in states with strict anti-ESG laws, costing states measurably in borrowing costs.
  • Federal preemption questions — The Biden administration issued guidance that ERISA-covered funds may consider ESG factors, creating direct conflict with state anti-ESG mandates for public pension funds. The conflict has not been definitively resolved.

Constitutional Concerns​

  • 1st Amendment — penalizing private entities for engaging in or endorsing economic boycotts as expressive conduct.
  • Compelled speech — requiring companies to certify political positions about industry as a condition of doing business with state government.
  • Dormant Commerce Clause — state laws regulating the investment philosophy of out-of-state financial institutions operating nationally.

Key Votes to Screen​

These are state-level votes. Relevant for screening:

  • State legislators who voted YES in Arkansas, West Virginia, Kentucky, Oklahoma, Indiana, North Dakota, and other states.
  • Governors who signed these bills (Abbott/TX, Sanders/AR, Justice/WV, Stitt/OK, Holcomb/IN).
  • Any federal legislator who has introduced or endorsed federal versions of anti-ESG mandates.

Why This Matters for We The Citizens​

This wave of laws is a direct parallel to anti-BDS laws: government using state purchasing power to punish politically disfavored boycotts. The same constitutional objection that applies to anti-BDS laws applies here. A politician who is consistent on free speech should oppose both — or explain in detail why boycotting Israel is different from boycotting oil companies. The inconsistency is the screen.

See also: Bad Laws Overview | Texas SB 13 | Florida HB 3 | Anti-Boycott Israel Laws

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