The bill would amend Chapter 809, Government Code, expanding the definition of "boycott energy company" to include companies which enage in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel based energy. It would also modify the definition of "financial company" to include a mutual fund or exchange traded fund, including a money market fund or government money market fund.
The bill would add reporting requirements regarding contracts with financial companies to be included in the annual report required by each state governmental entity that details divesture of securities and would add the Comptroller as an entity with which to submit the report.
The bill would add Subchapter D, prohibiting state governmental entities from entering into a contract worth $100,000 or more, with a company of at least ten employees, unless the contract contains verification that the company does not boycott energy companies, or is not a listed financial company or an affiliate of a listed financial company. However, this would not apply if the governmental entity determines that these requirements are inconsistent with the entity's constitutional or statutory duties related to issuance, incurrence, or management of debt obligations, or the deposit, custody, management, borrowing, or investment of funds.
The Employee Retirement System (ERS) anticipates that any costs associated with the bill could be absorbed using existing resources. According to the Teacher Retirement System (TRS) and the Permanent School Fund Corporation (PSF Corp.), the difference in returns between affected investments and those that would replace them cannot be estimated, and thus, the fiscal impact to the state cannot be determined.
According to the Texas County and District Retirement System (TCDRS) and the Texas Municipal Retirement System (TMRS), the bill could potentially have a negative impact on investment returns. However, there are fiduciary exceptions if an entity determines that the requirements of the bill are inconsistent with constitutional or statutory duties related to the management and investment of funds. Due to these factors, fiscal implications to local units of government cannot be determined.