Barclays, the British multinational bank, has just been sidelined in Texas. The state's Attorney General, Ken Paxton, has slammed the door shut on the bank’s ability to underwrite municipal bonds in the State of Texas. The move comes after Barclays allegedly gave the cold shoulder to inquiries about its environmental, social, and governance commitments.
The Attorney General's office issued a stern letter on Nov. 1, pinpointing Barclays as an entity under scrutiny, due to its membership in the Net Zero Alliance – a factor that could brand it a "fossil fuel boycotter", under Texas law. Despite requests for more detailed information on its ESG policies, Barclays chose not to respond, a decision that essentially forfeited its privilege to contract with Texas governmental bodies, according to a statement from Paxton's office.
Attorney General Ken Paxton Announces Barclays' Ineligibility to Participate in Texas's Bond Market For its Inability to Verify its "ESG" Policies Do Not Violate Texas Law: https://t.co/RVqqeTYZl6
— Texas Attorney General (@TXAG) January 26, 2024
The AG’s Public Finance Division declared in an "All Bond Counsel Letter" that Barclays is out of the game, effective immediately. "Until further notice, we will not approve any public security issued on or after today’s date in which Barclay's purchases or underwrites the public security or is otherwise a party to a covered contract relating to the public security", the letter detailed.
Paxton has garnered a reputation for going hard against ESG policies he believes could be weaponized against the state’s crucial industries. Citing a precedent where a major financial firm scrapped ESG ratings following an investigation sparked by his office. Paxton assured, "The Office of the Attorney General will continue to vigorously enforce our laws that prevent taxpayer funds from going to companies whose ‘ESG’ policies harm Texans or key Texas industries," he said. Texas stands firm on maintaining its muscle in the municipal bond market.
