Dive Brief:
- Texas Attorney General Ken Paxton said he will end his ongoing probe of major U.S.-based banks and allow them to conduct business in the Lone Star State following their recent departures from the Net-Zero Banking Alliance. Paxton has previously criticized the group for having “unlawful ESG commitments.”
- Paxton announced he would drop his review of Bank of America, Morgan Stanley and JPMorgan Chase in a Tuesday statement; all three banks exited NZBA within a one-week span at the beginning of the year. The Texas AG previously dropped his probe into Wells Fargo in December after the bank announced it was leaving the alliance.
- All four financial institutions — in addition to Barclays, Fidelity, State Street and others — were part of a review Paxton initiated in October 2023 that required the targeted firms to prove their NZBA membership wasn’t in violation of Senate Bill 13. The 2021 Texas legislation requires the state to stop doing business with companies that take actions to “limit commercial relations” with fossil fuel companies.
Dive Insight:
As of now, only three U.S.-based banks remain in the NZBA — Amalgamated Bank, Climate First Bank and Areti Bank — according to the group’s membership list. Goldman Sachs and Citigroup also left the Net-Zero Banking Alliance in recent weeks.
“More and more financial institutions are taking a major step in the right direction by leaving the radical and anti-energy Net-Zero Banking Alliance,” Paxton said in a Jan. 7 statement.
“The NZBA seeks to undermine our vital oil and gas industries, and membership could potentially prevent banks from being able to enter into contracts with Texas governmental entities.”
Paxton previously said Wells Fargo’s decision to terminate its membership in NZBA came after the state attorney general encouraged the bank to depart the alliance. In a December statement issued shortly after Wells Fargo made the announcement, Paxton said he “urged other financial institutions to follow their example.”
Though the recently departed major U.S. banks did not provide an explicit reason for their decision to leave the NZBA, their departures are set against a backdrop of climate-focused alliances facing increased scrutiny from the Republican party, which has initiated probes on ESG policies across multiple fronts. The NZBA defections also come just weeks before President-elect Donald Trump is set to return to the White House for a second term, with a Republican majority in both the House and Senate to bolster his legislative agenda.
The NZBA — whose members have committed to align their lending, investment and capital markets activities with global efforts to tackle climate change — has been the target of several GOP-led probes and investigations.
All of the six recently defected NZBA members — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — were subject to separate probes initiated by 14 Republican state attorneys general and 12 Republican heads of agriculture in the past few years.
In his Tuesday statement, Paxton called the alliance “an anti-oil and gas activist organization that pushes members to advance destructive climate goals regardless of their obligations to consumers and investors,” and applauded the banks for departing NZBA.
