Can Anti-ESG Policy Protect Targeted Industries from Divestment?

Jonah J. Allen ()
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Jonah J. Allen: Colorado School of Mines

Environmental & Resource Economics, 2025, vol. 88, issue 5, No 9, 1435-1477

Abstract: Abstract 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.

Keywords: ESG policies; Anti-ESG; Oil and Gas; Permian Basin; Reserve-based lending (search for similar items in EconPapers)
JEL-codes: G18 L71 Q38 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10640-025-00971-5

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