The cost of "anti-woke" policies to Texas taxpayers

The big picture: The state is effectively pulling back from doing business with banks like JP Morgan Chase, Goldman Sachs and Citigroup — on the grounds that they are investing in businesses with ESG (environmental, social and governance) policies, upsetting conservative state leaders.

Flashback: Determined to protect the oil and gas industry, state lawmakers demanded in 2021 that firms that "boycott energy companies" be cut off from doing business with Texas.

• In August, Texas' chief financial officer, Comptroller Glenn Hegar, unveiled a first-ever list of 10 financial firms — many of them heavy hitters — he said fit that bill.

State of play: Texas' anti-ESG policies are costing taxpayers about $416 million per year in the form of higher interest payments on municipal bonds, per a 2022 paper by Wharton Business School assistant professor Daniel Garrett and Federal Reserve economist Ivan Ivanov. The topic was highlighted recently by Bloomberg’s Matthew Winkler.

• The biggest banks — like Chase, Goldman Sachs and Citibank — charge lower average fees and often have a broader pool of investors, Bloomberg reports. That usually translates to a lower cost of capital for the borrower.

Zoom in: The city of San Antonio's Finance Department has not calculated the impact of such policies, deputy chief financial officer Troy Elliott tells Axios.

• "However, we have not experienced any noticeable impacts on the city’s debt financings," Elliott says.

Yes, but: Elliott has noticed reduced participation from some banks because of the restrictions.

Zoom out: The city of Anna, north of Dallas, passed over Citigroup for a mandate to lead a bond offering last fall, despite the bank submitting the most attractive bid, financially, Bloomberg reported at the time.

• The cost differential to the city of about 20,000 people is $277,334, a city spokesperson told Bloomberg.