Increased investigation of JPMorgan, Bank of America, and Wells Fargo's relationships with fossil fuels by Texas authorities

In a series of developments, the Texas Attorney General's office is reviewing whether several financial institutions are violating a state law through their membership in the Net-Zero Banking Alliance.

Last year, Republican AGs from 14 states, including Texas, sent civil investigative demands to JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs, and Morgan Stanley, asking for information about their participation in the Net-Zero Banking Alliance to determine whether they were blocking credit to oil companies.

The named institutions required to confirm compliance with the law in question, as per a letter dated Tuesday, include Morgan Stanley, State Street, TD, Royal Bank of Canada, Barclays, Fidelity, DNT Asset Trust, in addition to the initial four.

The Net-Zero Banking Alliance's commitment to reducing reliance on fossil fuels is being scrutinized by the Texas AG as potential "boycott" of energy companies. However, spokespeople for Wells Fargo and Barclays declined to comment on the matter, while other banks did not immediately respond to requests for comment from Bloomberg.

JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America are among the largest financial institutions that have been prominent fossil fuel financiers despite ongoing reviews and criticism of their membership in initiatives like the Net-Zero Banking Alliance. A JPMorgan spokesperson stated that the bank does not boycott energy companies and makes its own business decisions.

RBC, which has surpassed JPMorgan as the top fossil-fuel lender, according to the Rainforest Action Network's report in April 2023, is seeking to hire a head of climate transition, signaling a potential shift towards greener practices. A representative of RBC testified last year that they do not discriminate against energy companies or any other sector.

Lori Heinel, global chief investment officer for State Street Global Advisors, testified to the Texas Senate Committee on State Affairs in December that they do not pick and choose what to invest in, specifically stating they do not discriminate against energy companies or any other sector.

The Texas Attorney General's office expects to provide future guidance on avoiding market disruptions if a company is found to be in violation of Senate Bill 13. It's important to note that the letter from the Texas AG's office to bond issuers does not dictate how a court may rule in a legal proceeding.

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. The list primarily consists of European lenders such as BNP Paribas, HSBC, UBS, and Credit Suisse.

In a recent development, Texas Attorney General Ken Paxton was acquitted on 16 articles of impeachment, including allegations of corruption and bribery. The acquittal does not affect the ongoing review of financial institutions over their Net-Zero Banking Alliance membership.

Increased investigation of JPMorgan, Bank of America, and Wells Fargo's relationships with fossil fuels by Texas authorities