New Research Shows Legislation to Boycott ESG May Cost State Taxpayers up to $700 Million in Excess Payments

As several states consider new anti-sustainable investing initiatives, new analysis shows taxpayers in six states could have been on the hook for up to $700 million in excess interest payments, if restrictions on sustainable investing had been in place. State officials and state legislatures have either passed or will consider bills and initiatives based on a piece of model legislation developed by the American Legislative Exchange Council (ALEC), part of a coordinated conservative effort to prop up the fossil fuel industry while putting retirement nest-eggs at risk.   

“The firefighters’, school teachers’, and municipal workers’ in these Republican controlled states are the folks suffering from the actions of their elected officials” said As You Sow CEO Andrew Behar. “The legislators who passed these laws, forcing state treasurers to boycott financial institutions that have historically funded their municipal bonds, has led to reduced competition, a waste of funds, and an overall breach of trust. The fundamental job of a treasurer is to evaluate risk; including environmental risk, social risk, and governance risk. Legislators will face the backlash of their constituents for flushing hundreds of millions of dollars down the toilet for their own political games.

“This report highlights the potential multi-million-dollar economic burden on both residential taxpayers and businesses in states that are taking or considering actions to limit climate and other ESG considerations within their municipal bond work,” said Steven M. Rothstein, Managing Director, Ceres Accelerator for Sustainable Capital Markets. “These actions will increase costs and interfere with the free market in states that move forward.”

Until now, the costs associated with anti-sustainable investing legislative and executive initiatives to taxpayers has been relatively unknown. The ‘ESG Boycott Legislation in States: Municipal Bond Market Impacts’ study expands on a previous study by the Wharton School of Business that found significant financial impacts—potentially upwards of $532 million in additional interest payments—of recent legislation to Texas taxpayers. It uses the findings of that study to anticipate costs to six states that have passed or are considering similar legislation and directives. 

The new data finds that taxpayers in Kentucky, Florida, Louisiana, Oklahoma, West Virginia, and Missouri could have faced upwards of $708 million per year in additional interest charges on municipal bonds, if Texas-like restrictions had been in place. The higher interest rates are the result of less competition between finance firms for municipal bonds, as a result of the anti-sustainable investing legislation that forces state treasurers to boycott major banks and asset managers that historically have bid on the muni bond issuances.

The analysis found the aggregate increase in interest costs for the bonds issued in the analyzed states in the last 12 months are as follows:


Additional Cost Estimate Range (in millions)









West Virginia






*Because the average maturity of Oklahoma’s bonds was less than the time to Texas’s first call, the lower bound is the same as the upper bound

In addition to higher interest rates on municipal bonds, the anti-sustainable investing directives and legislation also have the potential to inflict serious economic harm on state and local citizens’ in other ways. The study’s authors identified three other areas where significant costs and financial harm may occur in addition to the municipal bond market that include: 

  • State and local treasury functions 
  • Pension investment performance
  • Government banking functions 

This analysis, like the Wharton study, focuses only on the municipal bond market impacts.

The Sunrise Project, on behalf of As You Sow and the Ceres Accelerator for Sustainable Capital Markets, commissioned economic and policy consultant firm Econsult Solutions, Inc. (ESI) to use the econometric analysis of Texas and its findings to provide estimates of the potential financial impacts on taxpayers.

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