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<p>This study examines the efficacy and implications of state-level anti-Environmental, Social, and Governance (ESG) policies by investigating the impact of Texas’s anti-ESG policy on oil and gas (O&amp;G) drilling activity through a difference-in-regression-discontinuity design comparing the Texas and New Mexico Permian. I find that the policy had no significant effect on new drilling activity, a key indicator of the long-term success of the state’s O&amp;G sector. This suggests that banks did not respond to the policy by adapting shorter-duration lending behavior, which has been subject to industry-wide changes in recent years and is particularly relevant to regulators seeking to protect O&amp;G investment within state borders. The paper highlights the need for further research into firms’ response to anti-ESG policy, which may be unsuccessful in its aims to protect state industry or influence banks to adapt lending behavior. This research contributes to the nascent literature on anti-ESG policies in the United States.</p>

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Can Anti-ESG Policy Protect Targeted Industries from Divestment?

  • 期刊论文

  • 发表日期：

    2025年4月10日

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  • Jonah J. Allen

摘要

This study examines the efficacy and implications of state-level anti-Environmental, Social, and Governance (ESG) policies by investigating the impact of Texas’s anti-ESG policy on oil and gas (O&G) drilling activity through a difference-in-regression-discontinuity design comparing the Texas and New Mexico Permian. I find that the policy had no significant effect on new drilling activity, a key indicator of the long-term success of the state’s O&G sector. This suggests that banks did not respond to the policy by adapting shorter-duration lending behavior, which has been subject to industry-wide changes in recent years and is particularly relevant to regulators seeking to protect O&G investment within state borders. The paper highlights the need for further research into firms’ response to anti-ESG policy, which may be unsuccessful in its aims to protect state industry or influence banks to adapt lending behavior. This research contributes to the nascent literature on anti-ESG policies in the United States.