Texas is cracking down on financial companies that state officials say may be mistreating the fossil fuel industry as the state implements a 2021 law aimed at protecting the state’s oil and natural gas businesses.
The law is reminiscent of
Even offering investors an option for fossil-fuel-free investment, such as a fund supporting environmental goals, may land a company in trouble, going by the language Texas Comptroller
Letters were sent to 19 major financial companies asking them to clarify their fossil fuel investment policies and procedures and provide a list of mutual funds or exchange-traded funds in their portfolios that prohibit or limit fossil fuel investment, Hegar said.
The U.S. and foreign companies, including JP Morgan Chase, UBS Group, and Wells Fargo, were given 60 days to respond or be presumed to be boycotting energy-related businesses. The three banks declined to comment.
Senate Bill 13, which took effect Sept. 1, prohibits the investment of state pension funds in financial companies that "boycott" energy businesses and requires the state comptroller to maintain a list of the boycotting entities.
The
More than 100 publicly traded investment companies that appear to have funds boycotting fossil fuels will be targeted in the next round of letters and all the responses will be used to help finalize the list, according to a statement from Hegar’s office.
The law reaches beyond pension funds; it also requires companies to provide written verification in contracts with governmental entities for goods and services that they do not and will not boycott energy businesses during the term of the contract.
A similar provision is in SB 19, which subjects banks to a litmus test over their treatment of the firearm industry in order to participate in municipal bond financings. Since that law became effective Sept. 1, muni underwriting in Texas by some major investment banks
A spokesman for Hegar said the list being assembled was specifically for divestment purposes and that it was up to each Texas state entity and subdivision to implement the contract provision in SB 13.
Texas Attorney General Ken Paxton’s office did not respond to a request for comment about municipal bond-related contracts under SB 13.
The Municipal Advisory Council of Texas website shows that since September, 38 bond firms, including UBS and Wells Fargo, submitted letters for the benefit of underwriting syndicate representatives verifying they do not discriminate against the firearm industry or boycott energy companies.
Hegar said some companies were peddling net zero and other environment policies in some states, while telling energy producing states like Texas they are committed to the fossil fuels sector.
“It is time for these companies to come clean, stop the big lie and realize they can’t have it both ways,” he said in the statement.
“By identifying such companies, we can do our part to help ensure Texas is not investing public funds alongside those engaged in this duplicitous scheme. This is the wrong time to cut back on our investment in the vital fossil fuel industry, which has helped define our state’s success for more than 100 years,” he added.
Hegar, a Republican first elected comptroller in 2014, is up for re-election in November.
