Texas AG Ken Paxton bars Barclays from municipal bond underwriting over its greenhouse gas reduction commitments, sparking financial debate.
In a move that escalates the standoff between state authorities and financial institutions over environmental policies, Texas Attorney General Ken Paxton announced on Friday that Barclays, the prominent British bank, would be barred from underwriting municipal bonds in the state.
This decision comes in the wake of the bank's failure to address inquiries from Texas officials regarding its commitments to reduce greenhouse gas emissions.
The clash centers around the contentious issue of environmental, social, and governance (ESG) investing. Republican figures, including Paxton, have voiced strong criticism of ESG principles and have taken steps to restrict the involvement of banks in the local government debt market, particularly when these institutions pledge to cut emissions or take other environmentally conscious actions.
This affiliation, according to the statement, raised suspicions that Barclays might fall under the category of a 'fossil fuel boycotter' as per Texas law.
The situation escalated when Barclays, upon being probed for further details about its ESG commitments, chose not to engage with the questions posed by Texas authorities. The bank acknowledged that this decision would likely result in the loss of its eligibility to contract with governmental entities in Texas.
In Texas, a finance chief maintains a list of financial firms categorized as boycotting energy companies, a list that Barclays may now join. The state has positioned itself at the forefront of a conservative pushback against a rule from the Biden administration. This rule permits the socially conscious investment of employee retirement plans, a policy that aligns with ESG principles but has met resistance from conservative quarters.
The standoff in Texas reflects broader national tensions over the role of ESG criteria in financial decision-making, setting the stage for continued debate over the balance between environmental stewardship and economic interests in government and corporate policies.
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