The Texas attorney general’s office is reviewing whether JPMorgan Chase, Bank of America, Wells Fargo and seven other financial institutions are violating a state law through their membership in the Net-Zero Banking Alliance.
More than 130 banks have joined the United Nations-backed effort, which pledges to finance “ambitious climate action to transition the real economy to net-zero greenhouse gas emissions by 2050.”
At issue, in the eyes of the Texas AG, is whether that commitment to a long-term scale-back of reliance on fossil fuels constitutes a “boycott” of energy companies. To that end, the state is requiring bond issuers to confirm that the 10 named companies are continuing to comply with the law in question, Senate Bill 13, according to a letter dated Tuesday.
The seven other institutions are Morgan Stanley, State Street, TD, Royal Bank of Canada, Barclays, Fidelity and DNT Asset Trust.
Banks’ ties to the Net-Zero Banking Alliance have come under fire before. Republican AGs from 14 states, including Texas, sent civil investigative demands last year to JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs and Morgan Stanley — asking for information about their participation in the alliance to determine whether they were blocking credit to oil companies.
Separately, Texas’ comptroller maintains a list of financial institutions it deems to be boycotting the fossil-fuel sector — and requires state pension funds to divest from those companies. The comptroller’s divestment list does not include any major U.S. banks, but rather is largely populated by European lenders such as BNP Paribas, HSBC, UBS and its recent acquisition, Credit Suisse.
“We make our own business decisions and do not relinquish decision making over these matters to third party organizations,” a JPMorgan spokesperson told Bloomberg in a statement Tuesday, presumably referring to the alliance. The bank does not boycott energy companies, the spokesperson added.
A representative of another bank on Tuesday’s list testified last year in a hearing in Texas that it doesn’t “pick and choose what to invest in.”
“More specifically, we do not discriminate against energy companies, or any other sector,” Lori Heinel, global chief investment officer for State Street Global Advisors, told the Texas Senate Committee on State Affairs in December, according to Bloomberg.
JPMorgan, for its part, decreased its fossil-fuel funding by 41.7% to $39.2 billion in 2022, according to an April report by the Rainforest Action Network. The bank had been the world’s top financier to fossil-fuel companies each year since 2016, according to the nonprofit’s figures.
Another of the 10 institutions Texas listed Tuesday — RBC — supplanted JPMorgan as RAN’s top fossil-fuel lender. That bank, too, appears to be greening up its image. The Toronto-based lender sought to hire a head of climate transition in August.
The letter to bond issuers comes roughly a month after Texas AG Ken Paxton was acquitted on 16 articles of impeachment, including allegations of corruption and bribery.
Paxton’s office expects to provide more guidance “and steps that may be taken to avoid market disruptions if a company is found to be in violation of Senate Bill 13” in the future, according to Tuesday’s letter, which notes “this letter does not dictate how a court may rule in a legal proceeding.”
Spokespeople for Wells Fargo and Barclays declined to comment to Bloomberg. Other banks did not immediately respond to requests for comment from the wire service.