Authored by Will Hild via The Center Square,

As the Texas Stock Exchange begins its launch, Texans have every reason to celebrate. Soon, the TXSE will join Nasdaq Texas as a fully functioning venue, and the NYSE has signaled a strong commitment to Texas as well. It is clear that Texas is emerging as a serious challenger to New York as the nation's financial capital.

Texas earned this moment by embracing lower taxes, lighter regulation, and, perhaps most importantly, better governance laws and more favorable proxy rules designed to make the state the best place in America to do business.

But Texans should remember why those reforms became necessary.

For years, some of Wall Street's largest financial institutions embraced Environmental, Social, and Governance (ESG) activism, using their enormous influence to pressure companies on political and social issues far beyond their fiduciary responsibilities. Many Texans viewed those efforts as an attempt to use financial power to reshape industries that are foundational to the state's economy and culture.

These companies came after oil and gas, cattle and coal. They pushed racist diversity standards and forced companies to hire based on factors they proclaimed were more important than simply focusing on who was best suited for the job.

This was met in Texas with significant contempt, and the backlash was swift. Texas Attorney General Ken Paxton opened investigations into Net Zero Banking and Asset Manager alliances led by the likes of Bank of America, JPMorgan Chase, BlackRock and State Street, among others. He also sued BlackRock, State Street, and Vanguard alleging antitrust violations. The state comptroller divested significant assets from BlackRock and the Texas Board of Education did the same.

The message from Texas was simple: financial institutions should focus on delivering returns, not political agendas. That's why as the TXSE becomes an operational venue, Texans must pay close attention to who's financing the exchange.

BlackRock, one of the most recognizable champions of ESG investing, is the founding institutional investor of the TXSE. Its CEO Larry Fink has argued that companies must address issues ranging from climate change to racial and gender inequality and famously said BlackRock would "force behaviors." In his 2021 letter to CEOs, Fink proclaimed that "no issue ranks higher than climate change." Texans saw his actions as evidence that America's largest asset manager was using its market power to influence policy rather than simply maximize shareholder value.

J.P. Morgan is also a major investor. This is the same bank that faced serious backlash for de-banking gun companies and manufacturers, and even President Donald Trump himself. JPMorgan Chase has also made aggressive climate finance commitments, including a pledge to finance a $1 trillion Green objective, to help transition to a lower-carbon economy.

Bank of America, another institutional investor in the exchange, likewise committed hundreds of billions of dollars toward sustainable finance initiatives. The bank has also embraced Critical Race Theory, requiring race-training for workers that calls America a system of "white supremacy" and encourages employees to be "woke at work."

The list goes on and the pattern is clear. The very companies helping to finance an alternative finance hub in response to a politicized marketplace are, in many cases, the ones that helped create the conditions that made such an alternative appealing in the first place. In other words, the demand for a more business-focused exchange did not emerge in a vacuum, but arose in large part as a reaction to the conduct of the very firms now seeking to capitalize on it.

That doesn't mean Texans should oppose the Texas Stock Exchange. Texas positioning itself as a market center is a major victory for Texans and for free enterprise. It demonstrates that companies are choosing Texas because it has created a better environment for business than New York, New Jersey or Delaware.

But success should never replace vigilance.

Texans should welcome every company that wants to invest in Texas, provided they respect the principles that made Texas attractive in the first place. If Wall Street firms have truly returned to prioritizing shareholders over politics, Texans should applaud that change.

If not, Texans shouldn't forget history.

Texas built an environment to free businesses from political activism. The companies investing in TXSE should understand that Texans expect them to leave their activist agendas behind.

And they'd be smart to remember, everything is bigger in Texas, including accountability.

Will Hild is the executive director of Consumers' Research, the nation's oldest consumer protection organization.