Attorney General Ken Paxton, along with nine other state attorneys general, has issued a warning to several major financial institutions regarding their commitments to diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) policies. The officials cautioned that such commitments could result in enforcement actions if they are found to breach state or federal laws.
The warning was directed at BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley. The letter emphasized that these companies' continued adherence to DEI and ESG policies—especially those involving unlawful race- and sex-based quotas or radical environmental measures—might contravene legal, contractual, and fiduciary responsibilities. The firms have been asked to provide responses that will help determine the necessity of any enforcement actions.
This development follows the exit of all major U.S.-based banks from the Net-Zero Banking Alliance (NZBA), an organization promoting a climate-focused agenda over consumer interests. Attorney General Paxton had previously encouraged this withdrawal due to concerns about potential conflicts with legal obligations.
"Attorney General Paxton stated: '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.' He added: 'Unlawful race- and sex-based quotas and so-called ‘green energy’ schemes will not be allowed to stand... Any institution found to be violating the law will be held accountable.'"
In October 2023, Attorney General Paxton initiated a review into several financial institutions including Wells Fargo, JPMorgan Chase, Morgan Stanley, and Bank of America for compliance with Texas Senate Bill 13. This law restricts governmental contracts with entities boycotting energy companies. Wells Fargo's departure from NZBA led Paxton to conclude his review concerning them.