Texas warns firms they could lose state contracts for divesting from fossil fuels

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Texas Comptroller Glenn Hegar sent letters to 19 financial firms Wednesday afternoon to determine whether they were violating a new state law that prohibits companies from “boycotting” fossil fuel companies.

Senate Bill 13, which went into effect in September, prohibits the state from contracting with or investing in companies that divest from oil, natural gas and coal companies. The law defines divestment as refusing to do business with a fossil fuel company because that company does not commit to environmental standards higher than expected by federal and state law.

Firms that received a letter include U.S.-based companies, like JPMorgan Chase & Co. and Wells Fargo & Company, and foreign companies like Jupiter Fund Management PLC and Sumitomo Mitsui Trust Holdings, Inc.

JPMorgan Chase & Co. and Man Group PLC declined to comment for this story. Other companies Hegar contacted — BlackRock, Inc.; NatWest Group PLC — did not respond to The Texas Tribune’s requests for comment.

“Our research thus far shows that some companies are telling us and other energy-producing states one thing, and then turning around and telling their liberal clients in other states another thing,” Hegar said in a press release Wednesday. “On one hand, they push net-zero and other environmental, social and governance (ESG) policies and use their influence and the dollars under their management to limit access to capital for Texas oil and gas firms. Then these same firms tell Texas and other energy states that they’re committed to the fossil fuel sector.”

Hegar’s office is working to compile a list of companies that “boycott” fossil fuel energy. In the letters, his office asks each company whether it has policies on environmental standards that go beyond state and federal requirements and how those are enforced. It also requires the company to list mutual funds or exchange-traded funds that limit or don’t allow investment in fossil fuels.

In the press release, he said his office plans to send more than 100 additional letters.

If the companies do not respond to the comptroller’s letter within 60 days, they will be presumed to be boycotting fossil fuel companies. Any companies on the comptroller’s list could see existing contracts with Texas governmental entities canceled and could face Texas pension funds divesting from them.

While many companies and governments have attempted to divest from fossil fuel-based energy in response to the growing climate crisis and effects of fossil fuels on global warming, Texas GOP lawmakers are doing the opposite.

Disclosure: JPMorgan Chase has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.