Oklahoma’s anti-ESG movement often follows in the footsteps of its Texas counterparts. In 2021, Texas led the nation in passing a ban on investing public funds in financial firms that consider ESG factors. Oklahoma followed suit in 2022, passing a substantially similar law. In February, a federal court found the Texas ESG investment ban unconstitutional. Now, the Oklahoma Supreme Court is weighing in, finding that the Oklahoma anti-ESG law violates the state’s constitution:
“We conclude Keenan possessed standing to commence his request for injunctive relief in the District Court. We conclude Energy Discrimination Elimination Act of 2022 (74 O.S.Supp.2025 §12001 – §12006, inclusive) is unconstitutional in its entirety when applied to OPERS because it conflicts with Okla. Const. Art. XXIII, §12. We affirm the District Court’s summary judgment granting a permanent injunction against Treasurer to the extent the injunction prevents the Treasurer from enforcing or applying the EDEA to the Oklahoma Public Employees Retirement System (OPERS).”
The opinion and the analysis behind it apply narrowly to OPERS based on a provision of the Oklahoma Constitution, which states:
“All the proceeds, assets and income of any public retirement system administered by an agency of the State of Oklahoma shall be held, invested, or disbursed as provided for by law as in trust for the exclusive purpose of providing for benefits, refunds, investment management, and administrative expenses of the individual public retirement system, and shall not be encumbered for or diverted to any other purposes.”
The court determined that the investing ban created a secondary purpose for OPERS’s fund allocation that fell outside the exclusive purpose mandated by the Oklahoma Constitution. The constitutional provision already requires OPERS to commit to its fiduciary duty. By imposing additional restrictions, the investing law sought to limit the scope of that fiduciary duty. This conflicts with the exclusive purpose of OPERS under the state constitution. Ultimately, the investing law still applies to other Oklahoma public entities, though there are other constitutional arguments against it, both state and federal. We’ll see if other plaintiffs come forward to challenge the law more broadly in the future.
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