Texas Bans Barclays from Bond Market over Bank’s ESG Policies

 Mark Segal January 29, 2024

Texas Attorney General Ken Paxton announced that the state has banned UK-based bank Barclays from participating as an underwriter in Texas’ municipal bond market, following the company’s failure to respond to requests for information over its ESG policies.

The announcement marks the latest in a series of moves in an ongoing anti-ESG movement by Republican politicians in the U.S. Texas has been one of the most active states in anti-ESG initiatives, with actions including having several asset managers placed on a list for potential divestment for allegedly “boycotting” energy companies, as well as joining a multi-state alliance to “protect individuals from the ESG movement,” through actions such as blocking the use of ESG in all investment decisions at the state and local level, and prohibiting state fund managers from considering ESG factors in their investments on behalf of the state.

Texas is the largest net energy supplier in the U.S., providing nearly a quarter of the country’s domestically produced energy, and accounting for over 40% of the nation’s crude oil proved reserves and production, according to the U.S. Energy Information Administration (EIA).

According to a statement released by the Office of the Attorney General (OAG), Barclays was identified as a potential “fossil fuel boycotter” due to its participation in a net zero alliance, and was sent a letter in November, alongside other banks including Bank of America, J.P. Morgan Chase, Morgan Stanley and Wells Fargo, among others, asking for more information concerning its ESG commitments.

The OAG said that Barclays informed the AG that it would not be able to respond to the inquiry, leading to the ruling that “until further notice, we will not approve any public security issued on or after today’s date in which Barclays purchases or underwrites the public security or is otherwise a party to a covered contract relating to the public security.”

The OAG added that “we have not heard from any of the remaining banks under review that they will not be able to respond to our inquiries.”

Paxton said:

“The Office of the Attorney General will continue to vigorously enforce our laws that prevent taxpayer funds from going to companies whose ‘ESG’ policies harm Texans or key Texas industries.”

While Barclays is a member of the Net Zero Banking Alliance, which involves commitments including transitioning lending and investment portfolios to align with an 2050 net zero pathway and setting interim financed emissions reduction targets, the bank has faced scrutiny from investors and sustainability-focused groups over its continued oil and gas financing.

Mark founded ESG Today following a 20 year career in investment management and research. Prior to founding ESG Today, Mark worked at Delaney Capital Management (DCM) in Toronto, Canada, most recently as the firm’s head of U.S. equities. While at DCM, Mark was part of the firm’s ESG team, responsible for evaluating and tracking the sustainability factors impacting portfolio companies, and assessing the suitability of companies for portfolio inclusion. Mark also spent several years in the sell-side research industry, covering the technology and services sectors. Mark holds an MBA from Columbia University in New York, a BBA from the Schulich School of Business at York University in Toronto, and is a CFA charterholder.