Can Anti-ESG Policy Protect Targeted Industries from Divestment?

Jonah Allen ()
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Jonah Allen: Department of Economics and Business, Colorado School of Mines

No 2024-01, Working Papers from Colorado School of Mines, Division of Economics and Business

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 statistically significant effect on new drilling activity in the eight months after implementation; this is consistent across several robustness checks. Results are also not economically significant, other than in a few robustness checks. This suggests that banks did not respond to the policy by adapting short-term lending behavior, which is one pathway through which to signal to the regulator that the institution is not boycotting energy companies. Short-term lending 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. This paper 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)
Pages: 54 pages
Date: 2024-01
New Economics Papers: this item is included in nep-ene and nep-env
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http://econbus-papers.mines.edu/working-papers/wp202401.pdf First version, 2024 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mns:wpaper:wp202401

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