Bill > HB872

This bill modifies the Texas Business Organizations Code by adding a new section that changes the burden of proof in certain derivative proceedings related to environmental, social, and governance (ESG) criteria. Specifically, in a shareholder derivative lawsuit alleging that a corporation improperly considered ESG criteria in making a decision, the corporation would now be required to prove that the act or omission was in the best interest of the corporation, effectively shifting the legal burden from the shareholder to the corporation. The bill will apply only to actions commenced on or after September 1, 2025, meaning that existing lawsuits will be governed by the previous legal standard. A derivative proceeding is a type of lawsuit where shareholders sue on behalf of a corporation to address alleged wrongdoing by the corporation's leaders or directors, and this bill seeks to make it easier for shareholders to challenge corporate decisions involving ESG considerations by requiring the corporation to justify its actions.

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https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB872