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Bill

HB 4723

Relating to prohibiting the use of environmental, social, or governance scores; providing a civil penalty.

89th Legislature (2025) Introduced by Mike Schofield

HB 4723 prohibits Texas entities from using environmental, social, and governance scores in decision-making and imposes civil penalties for violations.

Referred to Trade, Workforce & Economic Development
#business&commerce--general(i0050) #creditscoring(s0521) #civilremedies&liabilities(i0065)
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WeVote Research Nonpartisan
Bill Summary · HB 4723

Legislative bill overview

HB 4723 would prohibit the use of environmental, social, and governance (ESG) scores in Texas, likely restricting how businesses, investors, and financial institutions can consider ESG factors in decision-making. The bill includes civil penalties for violations, though specific penalty amounts and enforcement mechanisms are not detailed in the available information.

Why is this important

ESG scores have become increasingly influential in investment decisions, corporate financing, and business practices. This bill reflects a policy debate about whether ESG considerations represent legitimate business risk assessment or constitute political activism that disadvantages certain industries (particularly energy and traditional sectors). The outcome affects how Texas-based companies access capital and how investment firms operating in Texas can conduct business.

Potential points of contention

  • Definition and scope ambiguity: The bill's exact definition of "ESG scores" and which uses are prohibited (advisory only vs. mandatory consideration) remains unclear and could face legal challenges regarding vagueness
  • First Amendment concerns: Restrictions on considering ESG factors may conflict with free speech protections for investors and businesses expressing values through capital allocation decisions
  • Economic competitiveness: Limiting ESG considerations could disadvantage Texas businesses in national and global markets where ESG factors influence investment flows and consumer preferences
  • Enforcement challenges: Civil penalties require clear definitions of violations; disputes over whether companies are using ESG scores indirectly or through alternative frameworks could create litigation

Compiled from official sources — confirm details with the bill’s official record.

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