Wells Fargo Drops Net-Zero Goals After Texas AG’s Pressure

Texas Attorney General Ken Paxton praised Wells Fargo for dropping its net-zero financed emissions commitment and withdrawing from the Net-Zero Banking Alliance. The decision followed a state review into whether the bank was unlawfully discriminating against oil and gas companies. Paxton emphasized that financial institutions must prioritize investor returns over political activism. Texas law prohibits companies from boycotting fossil fuel businesses, and Paxton has pledged strict enforcement. This move signals a broader trend of banks reconsidering ESG commitments under political and regulatory pressure.

CONTENT:

• Broader Implications for Financial Institutions

Wells Fargo Drops Net-Zero Goals After Texas AG’s Pressure

Texas Attorney General Ken Paxton praised Wells Fargo for dropping its commitment to achieving net-zero financed emissions by 2050. The decision followed a review initiated by Paxton to assess whether the bank was discriminating against energy companies, particularly in the oil and gas sector.

Additionally, Wells Fargo recently exited the Net-Zero Banking Alliance, which Paxton described as an activist organization prioritizing an anti-energy agenda over U.S. energy independence.

“This marks a significant victory against the left’s relentless attack on American energy,” Paxton stated. “As long as I am in office, corporations that unlawfully boycott Texas’ oil and gas industry will not be tolerated. Wells Fargo has set a strong example by prioritizing investor returns and reversing course on its anti-energy policies. I will continue working to ensure that every financial institution operating in Texas follows suit.”

Texas Attorney General Ken Paxton praised Wells Fargo for reversing its commitment to achieving net-zero financed emissions by 2050, calling it a major victory in the fight against what he describes as politically motivated attacks on the energy sector. The decision came after Paxton launched a review to determine whether the bank was unlawfully discriminating against energy companies, particularly those in the oil and gas industry.

The review was part of a broader effort by Paxton’s office to enforce Texas laws that prohibit financial institutions from boycotting fossil fuel companies. Under Texas Senate Bill 13, enacted in 2021, state agencies are barred from contracting with companies that refuse to do business with the oil and gas industry due to environmental concerns. Paxton has been aggressive in ensuring that financial institutions comply with this law, arguing that economic decisions should be based on financial merit rather than political activism.

In addition to dropping its net-zero target, Wells Fargo also recently withdrew from the Net-Zero Banking Alliance (NZBA), a coalition of financial institutions committed to aligning their lending and investment portfolios with carbon neutrality by 2050. Paxton has been a vocal critic of the NZBA, labeling it as an organization that prioritizes environmental activism over America’s energy independence.

The NZBA, which operates under the United Nations’ Principles for Responsible Banking, has faced increasing scrutiny from conservative lawmakers and officials in states that rely on fossil fuel industries. Critics argue that participation in such alliances can pressure banks to limit funding for oil and gas projects, potentially harming jobs and economic growth in energy-producing states like Texas.

Paxton emphasized that financial institutions should focus on delivering strong returns for investors rather than engaging in political activism. “This marks a significant victory against the left’s relentless attack on American energy,” he said. “As long as I am in office, corporations that unlawfully boycott Texas’ oil and gas industry will not be tolerated.”

Broader Implications for Financial Institutions

Wells Fargo’s decision to step away from net-zero commitments signals a growing trend of financial institutions reevaluating their environmental policies in response to political and regulatory pressure. Other banks and asset managers have faced similar scrutiny in Texas and other Republican-led states, where officials are increasingly challenging environmental, social, and governance (ESG) investing principles.

Texas has already taken action against several major financial institutions that it deems hostile to the fossil fuel industry. In 2022, the state blacklisted BlackRock, UBS, and several other investment firms, accusing them of engaging in anti-energy policies. More recently, state officials have pressured JPMorgan Chase, Citigroup, and other banks to clarify their positions on financing oil and gas projects.

Paxton made it clear that he intends to continue these efforts, urging other banks and financial institutions to follow Wells Fargo’s lead. “Wells Fargo has set a strong example by prioritizing investor returns and reversing course on its anti-energy policies,” he stated. “I will continue working to ensure that every financial institution operating in Texas follows suit.”

The announcement underscores the ongoing battle between conservative policymakers and financial institutions over the role of climate-conscious investing. While environmental advocates argue that transitioning away from fossil fuels is necessary for long-term economic and environmental stability, opponents like Paxton maintain that such policies amount to a politically driven attack on a crucial sector of the U.S. economy.

As regulatory scrutiny intensifies, more banks may find themselves weighing the risks of maintaining net-zero commitments against the potential consequences of running afoul of state laws like those in Texas. For now, Paxton’s latest victory signals a clear warning to Wall Street: prioritizing ESG goals over Texas’ energy industry could come at a steep cost.