Texas Attorney General Ken Paxton’s office said it’s reviewing whether 10 financial companies, including Bank of America and JPMorgan Chase, violate a Republican-backed state law that punishes firms for restricting their work with the oil-and-gas industry because of climate-change concerns.
The probe pertains to companies that are members of groups seeking to reduce greenhouse gas emissions, the office said in a letter to bond lawyers on Tuesday. The office announced that it was reviewing companies that are members or affiliate members of the Net Zero Banking Alliance, Net Zero Insurance Alliance, Net Zero Asset Owner Alliance or Net Zero Asset Managers.
“This office is reviewing whether companies or any affiliates that are members of a Net Zero Alliance are companies that boycott energy companies in violation of Senate Bill 13,” Leslie Brock, assistant attorney general, said in the letter.
The probe is one of Paxton’s first major actions since his return to the Attorney General’s office after facing impeachment proceedings earlier this year. He was cleared of 16 articles of impeachment alleging corruption and bribery last month after being charged by the Republican-led House of Representatives.
The Net Zero Banking Alliance, convened under the United Nations, includes a group of banks that have committed to “financing ambitious climate action to transition the real economy to net-zero greenhouse gas emissions by 2050.” More than 130 banks are members of the alliance, according to its website.
Members or affiliate members of those initiatives include Bank of America, Barclays Plc, JPMorgan, Morgan Stanley, RBC Capital Markets, and Wells Fargo, the attorney general’s office said.
The banks are major underwriters in the $4 trillion state and local debt market. They face the potential of losing out on public finance business in Texas, which is the biggest market for municipal bond sales so far in 2023. Already, UBS Group AG, another major bank, is on a list of companies that the state comptroller determined violated the law. That hurt the company’s public finance business in Texas.
Separately, Citigroup is no longer underwriting Texas municipal-bond deals because of its firearm policies — the consequence of another GOP law passed in 2021.
The office said it would provide guidance and “steps that may be taken to avoid market disruption” if a company is found to be in violation of the legislation.
A spokesperson for JPMorgan said the bank doesn’t boycott energy companies. “We make our own business decisions and do not relinquish decision-making over these matters to third-party organizations,” it said in a statement.
Spokespeople for Wells Fargo and Barclays declined to comment. Representatives for the other banks didn’t immediately respond.