WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission (SEC)‘s Texas office has launched a preliminary probe into lenders’ disclosures about their policies on hot-button issues like climate change and gunmakers, according to two people familiar with the matter.
The inquiry appears to relate to two Texas laws, enacted last year, banning state entities from working with companies that discriminate against firearms or fossil fuel companies, the sources said.
Amid pressure from investors and employees, banks have become active on environmental, social, and governance (ESG) issues, eschewing gunmakers, backing racial equity projects and pledging to phase out fossil fuel lending, sparking a backlash from Republican lawmakers who worry sectors of the economy may lose access to credit.
Lenders who want to underwrite offerings of securities issued by Texas state and local governments have had to sign public certifications saying they do not “boycott” energy companies or have a practice, policy, or directive that discriminates against a firearm entity or firearm trade association.
Thirty-six companies have filed such certifications, according to the Municipal Advisory Council of Texas, a trade association which compiles and publishes the documents.
Among them are Barclays, Citigroup Inc, RBC Capital Markets, TD Securities, UBS Financial Services and Wells Fargo, according to certifications filed between September and November.
These lenders have pledged to cut their carbon footprints and achieve net zero greenhouse gas emissions by 2050, which will affect the companies they finance. In 2018, Citigroup also set restrictions on firearms sales for new retail-sector clients.