The study, commissioned by non-profit The Sunrise Project, attributed the higher costs primarily to reduced competition to underwrite government bonds in six states furthest along in restricting financial firms or considering doing so.
The restrictions would mean fewer banks seeking to underwrite municipal bond issuance, a common way for cities to raise money.
Republicans last year stepped up their backlash against firms that incorporate environmental, social or governance (ESG) goals into their business, arguing they should focus more on investment returns.
West Virginia last year barred banks, including some of the largest underwriters like JPMorgan, Goldman Sachs, Morgan Stanley, Wells Fargo, and the world's biggest asset manager, BlackRock, from winning state business because of their approach to sustainable finance, and other states have taken similar steps.
According to the new study, taxpayers in six states - Kentucky, Florida, Louisiana, Oklahoma, West Virginia and Missouri - could have faced up to $708 million in additional interest charges on municipal bonds over the past 12 months.
The study based its analysis on a recent Wharton School of Business paper that found Texas taxpayers could have faced up to $532 million in additional interest payments because of restrictions introduced in that state.
"Legislators will face the backlash of their constituents for flushing hundreds of millions of dollars down the toilet for their own political games," said Andrew Behar, CEO at shareholder advocacy group As You Sow, one of the backers of the study.
Differences among the states could limit the relevance of the Texas model. Matt Frey, a policy adviser to Kentucky's Republican Treasurer Allison Ball, noted municipalities are exempt from a recent state law meant to protect energy companies and therefore "it should not affect the municipal bond market" in the state."
(Reporting by Tommy Reggiori Wilkes and Ross Kerber; Editing by Aurora Ellis)
By Tommy Wilkes and Ross Kerber
