Retirement uncertainty is high. Consumer confidence has inched down. The economy is shaky, with inflation persistently increasing costs of everyday goods. And yet elected officials are still focusing on environmental, social, and governance (ESG) investing above all else.

Today the Texas Senate Committee on State Affairs held a hearing to discuss three topics in anticipation of next year’s regular legislative session. One part of the hearing that brought in the most outside attention from invited witnesses was the “Responsible Investing” portion. The committee is tasked with “study[ing] the impact of ESG factors on our state’s public pensions, with a focus on proxy voting services,” and specifically, “examine how a company is removed from the list…”

The impact of – not ESG investing, but their ESG law – is significant. But they didn’t discuss that, nor did they actually discuss how a company can be removed from the list.

So far, none of the companies put on the list have been taken off. At the same time, Senator Hughes pointed out several other companies not on the list that are “horrible offenders” when it comes to ESG voting or other pro-ESG policies. The policy is both confusing in that it doesn’t include all the worst supposed offenders, as well as lacking clarity on how a company can get off the list.

Worst of all, it’s unnecessarily expensive. Earlier this year, the Texas Association of Business Chambers of Commerce Foundation (TABCCF) released a studythat showedthe serious financial impact of Texas’ Fair Access law (SB 13) that was passed in 2021. The study found the law will result in: $668.7 million lost in economic activity; $180.7 million in decreased annual earnings; 3,034 fewer full-time, permanent jobs; and $37.1 million in losses to State and local tax revenue.

The second part of the task for the committee is to “make recommendations to ensure our state’s pension systems vote and invest in accordance with their fiduciary responsibility to maximize profit.” Again, the committee did not really touch on this because each witness continued to bring up examples of companies investing in ESG; many that were exaggerated, untrue, or simply outdated. And we already know the answer as to how to maximize profits: Take politics out and focus on returns.

When the government tries to mandate things that have no relation to financial returns, it will always lead to less competition and lower returns. Less competition in the municipal bond market leads to higher interest costs, increasing debt burdens on local governments, strains resources, and creates a domino effect that ultimately costs taxpayers. Other studies and estimates from other states all point to the same results when passing anti-ESG laws: higher costs, lower returns.

In their consideration of “responsible investing,” it’s worth restating the costs to taxpayers – in Texas and other places that have issued similar laws. Retirement is already hard and stressful enough without adding partisan politics to the mix.

Given how this hearing went, Texas should course-correct and use future hearings to actually discuss the laws impact and the ways companies can be removed from the state boycott list. Otherwise, it just adds fuel to the fire that anti-ESG laws are more of a political stunt than effort for constituents.