- This step followed the bank’s failure to respond to inquiries about its carbon emission commitments.
- Barclays ranked as the 11th largest underwriter of municipal bonds in 2023.
Texas Attorney General Ken Paxton has blocked Barclays from participating in municipal bond deals. The bank’s failure to respond to inquiries about its carbon emission commitments led to this decision.
According to a report by Bloomberg, this clash stems from Texas’ scrutiny of banks’ ties to the fossil fuel industry, raising questions about environmental, social, and governance (ESG) practices and compliance with state laws. As the Lone Star State emerges as a key player in the municipal bond market, the implications for Barclays are significant.
When pressed for details on its ESG stance, the AG’s office asserts that Barclays did not respond, acknowledging the potential consequences. This move led Paxton’s office to cease approval for any municipal securities underwritten by Barclays in Texas.
Paxton’s probe into Barclays and other banks revolves around allegations of industry boycotts and their impact on fossil fuels. This investigation aligns with a 2021 Texas law targeting banks associated with groups advocating for greenhouse gas emission reduction.
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Environmental, Social, And Governance Dispute
The stakes are high for Barclays, given that it is the 11th-largest underwriter of municipal bonds in 2023 and holds the ninth-largest management position in Texas. The fallout from this clash could reshape the landscape of Barclays’ municipal bond activities in the state.
While Barclays proudly claims membership in the Net-Zero Banking Alliance, dedicated to achieving net-zero greenhouse gas emissions by 2050, this affiliation has not shielded the bank from Texas’ stringent scrutiny.
The clash reveals a potential disconnect between the alliance’s commitments and the expectations of Texas’s authorities, leaving Barclays facing the consequences of its ESG stance.
Texas, with its surging population and infrastructure demands, has become a pivotal market for municipal bond sales. Barclays’ exclusion from underwriting public securities significantly blows its public finance department. The repercussions extend beyond a mere disagreement over ESG practices, impacting the bank’s access to new business opportunities in the thriving Texas market.
