Big banks back down on climate policies
The world’s largest financial services firms promote themselves as fighters against climate change, which has given Texas politicians a priceless opportunity to crusade against so-called woke capitalism.
Both sides delude the public with half-truths and clever marketing. This is the third and final part of a column series on Texas’ war against environmental, social and governance investing, known as ESG. Texas GOP lawmakers passed a law in 2021 banning state and local governments from doing business with financial institutions that boycott fossil fuel firms, which contributed $26 billion in state tax revenues last year. They ordered the state’s elected chief financial officer, Comptroller Glenn Hegar, to draft a blacklist.
Hegar’s office, which refuses to explain the evaluation process in detail, has banned 11 financial firms, including the world’s largest banks: BlackRock, BNP Paribas, HSBC Holdings, UBS and Credit Agricole. He’s also blacklisted 350 investment funds that boycott fossil fuel companies.
“Our objective is to provide a brighter spotlight on the importance of the fossil fuels industry in our everyday lives,” Hegar told his agency’s newsletter, “Fiscal Notes,” in explaining the policy.
Hegar’s inclusion of BlackRock, which with $10 trillion in assets under management is the world’s largest financial institution, was the most obvious target after CEO Larry Fink promised in 2021 that BlackRock was “committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner.”
After BlackRock was blacklisted, though, the company’s tune changed in emails to
Hegar, obtained through a public information request.
“We do not boycott energy companies,” Dalia Blass, BlackRock’s head of external affairs, wrote in a May 13, 2022, email. “On behalf of our clients, we have committed or invested more than $8.3 billion — across 130 private market investment deals — into projects and companies based, or with meaningful operations, in Texas.”
Wayne Christian, a member of the Texas Railroad Commission, which regulates the oil and gas industry, met with BlackRock executives and called out the company’s hypocrisy.
“It was nice to hear that BlackRock didn’t mean — or no longer believes — many of the disagreeable things the company and its CEO Larry Fink have said about the oil and gas industry,” Christian wrote in a post-meeting email obtained by the nonprofit Bureau of Investigative Journalism.
BlackRock is still trying to get back into Texas’ good graces. It hosted a conference in February to encourage fossil fuel investments, with Lt. Gov. Dan Patrick as a celebrated guest.
“We created this blacklist of companies we didn’t feel were friendly towards fossil fuel, and BlackRock was put on that list,” Patrick told my colleague Claire Hao at the conference. “We got the attention of companies, and one was BlackRock. To Larry Fink’s credit, he reached out to me, (saying) ‘I’m telling you that we really do believe in fossil fuels.’”
Access to the $50 billion-a-year government debt market in Texas was significant enough that BlackRock’s support for ESG shareholder resolutions dropped to only 8% in 2023 from 40% in 2021, according to ShareAction, a nonprofit that tracks shareholder activism.
Under Republican pressure, Bank of America in December rolled back its ban on financing new coal mines, coalburning power plants and other climate-damaging projects, the New York Times reported.
Attorney General Ken Paxton, meanwhile, threatened in October to add eight more big banks to the list, including Wells Fargo and JPMorgan Chase. Paxton wants to grab some of the spotlight from Hegar.
“I directed my Public Finance Division to take proactive measures beyond securing written verification to verify that companies that underwrite municipal bonds in this state comply with these important laws,” he wrote in an official advisory letter. “Any contract with any company on the Comptroller’s list, or on the Attorney General’s list, e.g., Citigroup, is likely to be illegal.”
Citigroup and Goldman Sachs voluntarily withdrew from the Texas market. JPMorgan Chase CEO Jamie Dimon was unamused.
“I urge them to be very careful,” Dimon said in an interview with Bloomberg News on Nov. 1. “It may hurt the ability to raise money.”
Dimon’s tough talk did not last. On Feb. 15, he pulled his company from the Climate Action 100+. BlackRock also pulled back its commitments. All told, financial services companies reduced their climate commitments by $14 trillion.
Climate change-denying politicians across the country, led by Patrick, Hegar and Paxton, have succeeded in slowing the fight against global warming. But the CEOs are still waiting to see if it’s enough to get off the Texas blacklist or if they must offer more concessions.