Cutting off the fiscal nose: the impact of anti-ESG policies on municipal borrowing costs in Oklahoma

Travis Roach and Mariya Burdina

Local Government Studies, 2025, vol. 51, issue 6, 1318-1339

Abstract: In response to a growing trend of investors choosing investments that prioritise Environmental, Social, and Governance (ESG) goals, some state governments have sought to prohibit state entities from doing business with banks that offer these investment alternatives. In this work, we examine the unintended consequences of an anti-ESG policy on municipal borrowing costs in the state of Oklahoma. Using detailed municipal bond data and a difference-in-differences approach, we find that Oklahoma’s recently enacted Energy Discrimination Elimination Act caused a statistically significant increase in municipal borrowing costs. The unintended economic consequences of politicising ESG for local governments have major implications for borrowing costs at all levels of governance resulting in upwards of $164 million additional expenses over the first 17 months of the policy.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:taf:flgsxx:v:51:y:2025:i:6:p:1318-1339

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DOI: 10.1080/03003930.2025.2527419

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