Texas officials identify companies that may run afoul of new law against ‘boycotting’ fossil fuels

AUSTIN — Texas has identified 19 major financial firms that may be in violation of a new state law that punishes companies for divesting from fossil fuel holdings.

On Wednesday, Comptroller Glenn Hegar wrote to the companies — which include JPMorgan Chase, BlackRock and Wells Fargo & Company — demanding more information about their investment strategies for oil, natural gas and coal. Under the new law, companies that “boycott” the fossil fuel industry risk losing state contracts and investments from Texas pension funds.

“This is the wrong time to cut back on our investment in the vital fossil fuel industry, which has helped define our state’s success for more than 100 years,” Hegar, a two-term Republican, said in a statement. “Texas won’t sit idly by while Washington and Wall Street peddle a fairy tale that has real negative consequences for the Texas economy, our energy independence and our national security.”

Universities, foundations and public pension funds across the country have begun shifting away from fossil fuels in response to the growing threat of climate change. Not Texas.

Last year, the GOP-led Legislature enacted a law that bars the state from contracting with firms that limit business with the fossil fuel industry. The policy also calls for pension funds, such as the state employees and teacher retirement systems, to divest from companies that cut ties with oil and gas, so long as the moves won’t cause financial harm.

Hegar’s office is tasked with compiling the list of prohibited companies. The firms he contacted on Wednesday must respond within 61 days or they will be “presumed to be boycotting energy companies,” according to copies of the letters obtained by.

The firms, based worldwide, include BNP Paribas, Credit Suisse Group, HSBC Holdings and UBS Group, which has a Dallas office space located in Hotel Crescent Court. The companies did not immediately respond to a request for comment. JP Morgan Chase and London-based Man Group PLC, an investment management firm that is also listed, declined to comment.

Hegar’s letter asks the firms whether they have “pledged to meet environmental standards beyond applicable federal or state law” and if they have written policies restricting investments in energy companies

Another round of letters will soon go out to 100 other publicly traded investment companies, according to the comptroller’s office.

It remains to be seen whether any will be blacklisted or what the financial impact could be.

While Texas lawmakers have tried to steer corporate policy with the state’s pocketbook before — by barring contracts with companies that boycott Israel or do business with Iran — the latest efforts are far more expansive.

Last session, lawmakers also blocked state and local governments from contracting with companies that restrict their business with the firearms industry. As a result of that change, several large banks have been shut out of underwriting municipal-bond deals in Texas, according to Bloomberg.

State leaders are already weighing in on the companies they want barred from doing business in Texas because of their stances on fossil fuels.

In January, Lt. Gov. Dan Patrick, who championed the bill last session, pressed Hegar to put BlackRock “at the top of the list” after CEO Larry Fink advocated an investment strategy focused on climate change and sustainability. But the New York-based investment manager has since assured Texas officials it will “continue to invest in and support fossil fuel companies,” according to CBS News.

BlackRock did not immediately return a request for comment on Wednesday.