Investigation intensifies in Texas over JPMorgan, BofA, Wells Fargo's connections to fossil fuels
The Texas Attorney General's office is currently reviewing whether a group of financial institutions, including JPMorgan Chase, Bank of America, Wells Fargo, and seven others, are violating a state law. This review follows a series of investigations and allegations concerning these institutions' participation in the Net-Zero Banking Alliance (NZBA), a United Nations-backed effort aiming to transition the real economy to net-zero greenhouse gas emissions by 2050.
The 10 institutions under review also include Morgan Stanley, State Street, TD, Royal Bank of Canada, Barclays, Fidelity, and DNT Asset Trust. The Texas Attorney General, Ken Paxton, has accused these institutions of potentially violating antitrust regulations due to their membership in the NZBA, a group that aims to reduce carbon emissions to net zero by 2050.
The investigation comes after Republican AGs from 14 states, including Texas, sent civil investigative demands to several major banks last year regarding their participation in the NZBA. The Texas Attorney General's office is requiring bond issuers to confirm that these 10 companies are continuing to comply with Senate Bill 13.
While more than 130 banks have joined the NZBA, the Texas Attorney General's office may provide future guidance on avoiding market disruptions for companies found in violation of Senate Bill 13. It is important to note that the letter from Texas AG Paxton's office does not dictate how a court may rule in a legal proceeding.
In response to the allegations, a JPMorgan spokesperson stated that the bank does not boycott energy companies and makes its own business decisions. Spokespeople for Wells Fargo and Barclays declined to comment, while other banks did not immediately respond to requests for comment from Bloomberg.
Meanwhile, RBC, which has replaced JPMorgan as the top fossil-fuel lender according to the Rainforest Action Network, is seeking to hire a head of climate transition. RBC has not commented on the ongoing investigation.
It is worth mentioning that the Texas comptroller maintains a list of financial institutions deemed to be boycotting the fossil-fuel sector and requires state pension funds to divest from those companies. However, the comptroller's divestment list does not include major U.S. banks but is largely populated by European lenders such as BNP Paribas, HSBC, UBS, and Credit Suisse.
A representative of another bank on the list testified that they do not discriminate against energy companies or any other sector. The NZBA pledges to finance "ambitious climate action" to transition the real economy to net-zero greenhouse gas emissions by 2050.
Following the investigations and allegations, Texas Attorney General Ken Paxton was acquitted on 16 articles of impeachment earlier this year. The outcome of the ongoing review remains to be seen.
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