Attor­ney Gen­er­al Ken Pax­ton Warns Major Finan­cial Insti­tu­tions that DEI and ESG Com­mit­ments Could Lead to Enforce­ment Actions if Found to Vio­late State or Fed­er­al Laws

Attorney General Ken Paxton and 9 State Attorneys General warned major financial institutions that certain diversity, equity, and inclusion (“DEI”) and environmental, social, and governance (“ESG”) commitments could lead to enforcement actions if they are found to violate state or federal law following a review. 

Addressed to BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley, the letter warned that their apparent continued commitment to DEI and ESG policies that prioritize politics over consumers and investors, such as unlawful race- and sex-based quotas and radical environmental policies, may place them in violation of their legal, contractual, and fiduciary obligations. The companies have been invited to provide answers that will enable the Attorneys General to further determine whether an enforcement action is appropriate. 

The letter follows the withdrawal of every major bank based in the U.S. from the Net-Zero Banking Alliance (“NZBA”) after Attorney General Paxton’s strong encouragement to do so. NZBA is an anti-energy activist organization that requires its members to prioritize a radical climate agenda over consumer and investor interests. 

“Banks and financial institutions are finally starting to realize that the ESG and DEI policies pushed by radical activist groups are bad for consumers and potentially violate the law,” said Attorney General Paxton. “Unlawful race- and sex-based quotas and so-called ‘green energy’ schemes will not be allowed to stand and I will continue to urge these organizations to uphold the legal obligations they owe to consumers and investors. Any institution found to be violating the law will be held accountable.” 

In October 2023, Attorney General Paxton opened a review into Wells Fargo, JPMorgan Chase, Morgan Stanley, Bank of America, and other financial institutions for compliance with Senate Bill 13, a Texas law prohibiting governmental entities from entering into contracts with entities that boycott energy companies. Membership in a net-zero alliance indicated that their activities might have required them to be classified as energy-company boycotters under state law. When Wells Fargo withdrew from NZBA, Attorney General Paxton ended his review. 

To read the letter to major financial institutions, click here.