Dive Brief:
- Texas Attorney General Ken Paxton has banned United Kingdom-based bank Barclays from participating in the state’s municipal bond market over its role as a “fossil fuel boycotter,” Paxton’s office announced Friday. The Republican lawmaker said the bank failed to respond to requests inquiring about its ESG commitments.
- The bank had been under review since last year for its participation or affiliation with the United Nations’ Net Zero Alliance programs — initiatives that aim to slash greenhouse gas emissions by adjusting investment portfolios — Paxton’s office said in an All Bond Counsel letter. Per the letter, Barclays told the state last week it would not be able to provide additional information to prove compliance with the law.
- The Lone Star state said it will no longer approve any municipal bonds or public securities that Barclays underwrites or is associated with the bank. Barclays was the ninth-largest underwriter of Texas municipal bonds in 2023, according to Bloomberg.
Dive Insight:
Paxton’s office first sent a letter to Barclays in November for its affiliation with a Net Zero Alliance, along with letters to other financial institutions Bank of America, J.P. Morgan, Morgan Stanley, TD Bank, State Street and Wells Fargo. The letter said any members of a Net Zero alliance would automatically be reviewed for violation of Texas law.
Texas Assistant Attorney General Leslie Brock, chief of the Public Finance Division, said Barclays’ January letter admitting it could not provide any additional information included an acknowledgment that its decision would lead to it being banned from working with the state.
“As with all potential underwriters of public securities, we hope that Barclays will comply with Texas law,” Brock said in last week’s All Bond Counsel letter. “As of today, we have not heard from any of the remaining banks under review that they will not be able to respond to our inquiries.”
The state initially added BlackRock and nine other firms to its list of companies banned from state pension fund investments over their fossil fuel stances in 2022. Though Texas Comptroller Glenn Hegar added five additional financial institutions to the boycott list in November last year, BlackRock remains the only American-based company banned for its fossil fuel stances.
Paxton’s office also used the announcement to take a victory lap for S&P Global Ratings’ August announcement that it would no longer publish or update its ESG-related credit indicators. Paxton and a coalition of Republican AGs in other states had sent a civil investigative demand to S&P in September 2022.
Paxton said his office will “continue to vigorously enforce our laws that prevent taxpayer funds from going to companies whose ‘ESG’ policies harm Texans or key Texas industries,” in the release announcing the Barclays bond ban.
