Texas-Led Multi-State Coalition Threatens BlackRock, Goldman Sachs, JPMorgan and Others with Legal Action Over ESG Commitments

“The letter was co-signed by 9 other state Attorneys General, including the AGs of Alabama, Idaho, Indiana, Iowa, Montana, Nebraska, South Carolina, Utah and Virginia.”

Texas-Led Multi-State Coalition Threatens BlackRock, Goldman Sachs, JPMorgan and Others with Legal Action Over ESG Commitments

Mark Segal January 28, 2025

Texas Attorney General Ken Paxton announced that he has sent a letter to BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley warning the Wall Street firms of potential legal actions over their diversity and climate investing policies and practices.

The letter was co-signed by 9 other state Attorneys General, including the AGs of Alabama, Idaho, Indiana, Iowa, Montana, Nebraska, South Carolina, Utah and Virginia.

The letter marks the latest move in an ongoing anti-ESG and DEI campaign by Republican politicians in the U.S. over the past few years, which has gained momentum since the election of Donald Trump. Texas has been one of the most active states in anti-ESG initiatives, with actions including having several asset managers placed on a list for potential divestment for allegedly “boycotting” energy companies, and more recently launching a multi-state lawsuit against BlackRock, Vanguard and State Street, accusing the asset managers of using their positions in climate-focused investment initiatives to manipulate energy markets.

In the weeks following the election, each of the firms targeted by the new letter announced withdrawals from climate-focused investment and finance coalitions, including the Net-Zero Banking Association (NZBA) and the Net Zero Asset Managers (NZAM) initiative.

While the letter states that the AGs “applaud you for terminating your relationships” with the NZBA, NZAM and climate-focused engagement network Climate Action 100+ (CA100+), the AGs added that “we still want answers” to decisions made by the firms while they were members of the groups, and accused the firms of potential legal violations through their support for net zero-focused shareholder resolutions and engagement practices.

The letter added that statements made by some of the firms reiterating their net zero commitments after leaving the groups “raise serious concerns as to whether your exodus is an optics-only effort.”

The letter also warns the firms of potential legal actions related to their DEI policies, including “discriminatory employment quotas,” such as BlackRock’s use of DEI goals in employee performance reviews and bonus considerations, “discriminatory board quotas,” citing BlackRock’s proxy voting guideline that encourages large companies to have boards with “at least two women and a director who identifies as a member of an underrepresented group” as an example, and “discriminatory supplier quotas,” such as Goldman Sachs’ goal to “spend a cumulative $1.5 billion with small and diverse vendors between 2023 and 2025.”

The letter includes a series of questions for each firm regarding their ESG and DEI policies, requesting responses within 45 days as an “opportunity to avoid a lengthy enforcement action,” and to “demonstrate whether violations have occurred, whether they will continue, and the necessity of enforcement actions to vindicate federal or State laws.”

In a statement released alongside the letter, Texas AG Paxton said:

“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. 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.”

Click here to access the letter.