The Houston Chronicle has published a three-part series outlining Texas lawmakers’ organized effort to ban responsible investing. Columnist Chris Tomlinson outlines how the passage of SB13 in 2021 – an anti-boycott law protecting the coal, oil, and gas industry – has played out since and how the law puts a burden on taxpayers with the potential for $22 billion in higher interest rates and fees over the next 30 years.
Part 1: Texas started a war against ‘anti-fossil fuel’ banks. It could cost taxpayers $22 billion.
Key Point: “If you’re going to be anti-fossil fuels, if you’re going to demand certain policies before you loan companies money, then we’re not going to do business with you. That’s a policy that we took to protect our oil and gas industry.” – Lt. Gov. Dan Patrick
- After the passage of SB13, Texas began its crusade against responsible investments with a lawsuit against UBS Group, a multinational investment bank that won a bid to deliver a $18.6 million bond initiative to the Normangee Independent School District.
- Texas Comptroller Glenn Hegar blocked the initiative and attacked the group for engaging in responsible investing practices, despite UBS pushing back that it still does business with energy companies.
- Research from the Wharton School and the Federal Reserve of Chicago shows that SB13 will cost Texas taxpayers $300 to $500 million in additional interest charges.
Part 2: Texas lawmakers target large ‘climate-friendly’ banks — and avoiding boycotts won’t stop them
Key Point: “The problem with protecting oil and gas, though, is the high cost to Texas taxpayers. Only a few companies can handle the $50 billion in bonds that Texas governments issue yearly. Companies compete by offering lower interest rates than others. But when you take the biggest players out of the competition, the cost of those bonds goes up.”
- Not only does SB13 ban the state from making deals with financial firms that engage in responsible investing, but the law also punishes companies for investing in coal, oil, and gas companies if they demand action around climate change.
- While BlackRock, the world’s largest financial institution, engages in responsible investing, the company noted in a letter to Texas lawmakers after being blacklisted that BlackRock currently has over $115 billion invested in Texas energy companies out of its $310 billion in energy companies globally.
- Despite this, Lt. Gov. Dan Patrick, Texas Comptroller Glenn Hegar, and Railroad Commissioner Wayne Christian slammed the company for engaging in ‘woke capitalism’ and held up its position on the blacklist.
- “Texas is arguably the first state to pass anti-ESG legislation, which first emerged from conservative think tanks after large companies began advertising themselves as ‘climate-friendly’ in the early 2000s. Conservative groups, such as the Texas Public Policy Foundation, lobbied Republican lawmakers to pass the bill.”
Part 3: Big banks back down in climate fight after Texas lawmakers blacklist them for ‘woke’ capitalism
Key Point: Texas Comptroller Glenn Hegar’s office refuses to explain the evaluation process in detail, and has banned 11 financial firms and blacklisted 350 investment funds that boycott fossil fuel companies.
- Attorney General Ken Paxton 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.
- 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.”
To read the full series, click here for Part 1, Part 2, and Part 3.
