Oil and natural gas are a significant source of revenue for the Texas economy. However, many corporations such as financial firms are distancing themselves from fossil fuels, preferring instead to use renewable energy sources such as solar and wind power. In an attempt to bolster the state economy and protect its oil and gas industry, Texas recently banned local and state governments from working with 10 financial firms that he says do not support oil and gas enough.
A controversial move to support the economy
Texas Comptroller Glenn Hegar led the initiative, surveying hundreds of companies that have contracts with public entities to determine whether they were avoiding investments in the oil and gas sector. As a result of his findings, the comptroller has banned 10 financial firms from entering into contracts with Texas municipalities. He claims that these companies “boycott” fossil fuels in favor of green energy sources.
The banned firms include:
- BlackRock, Inc.
- Credit Suisse Group AG and UBS Group AG
- BNP Paribas SA
- Danske Bank A/S
- Jupiter Fund Management PLC
- Nordea Bank ABP
- Schroders PLC
- Svenska Handelsbanken AB and Swedbank AB
- Goldman Sachs’s Paris-aligned Climate US Large Cap Equity ETF
- JP Morgan’s U.S. Sustainable Leaders Fund
The action is not without controversy. A spokesperson for BlackRock, Inc., insisted that the company does not boycott fossil fuels but instead has investments of over $100 billion in Texas’s energy industry. It also puts local and state governments scrambling to divest from the banned entities with which they have municipal bonds.
The future for municipalities and firms is unclear
As reliance on fossil fuels becomes more controversial and sustainable energy becomes more accessible, municipalities will likely find themselves in even more situations like this one. Leaders such as the state comptroller may implement other initiatives to strengthen the oil and gas sector – to municipalities’ benefit or detriment, depending on the circumstances.