Texas added HSBC Holdings to its list of firms that are boycotting the oil and gas industry, a move that could lead to a prohibition of Texas government agencies from investing with the European megabank.
Texas Comptroller Glenn Hegar said in a news release Monday that the decision came on the heels of an updated energy policy issued by HSBC in December.
Mr. Hegar said the companies on the list are subject to the divestment provisions outlined in Texas Government Code Chapter 809, which defines a financial company as a publicly traded financial services, banking or investment company.
Mr. Hegar said state governmental entities, including the $179.3 billion Texas Teacher Retirement System; $41.8 billion Texas County & District Retirement System; $34.6 billion Texas Permanent School Fund; $34 billion Texas Municipal Retirement System; $32.7 billion Texas Employee Retirement System, and $134 million Texas Emergency Services Retirement System are subject to the investment prohibitions and divestment requirements by this measure. All of the funds are based in Austin.
On Dec. 14, HSBC announced that in line with its goal to achieve net zero in its portfolio of energy clients by 2050, the bank will "no longer provide new lending or capital markets finance for the specific purpose of projects pertaining to new oil and gas fields and related infrastructure." Further, HSBC noted it will "encourage and support clients to decarbonize and diversify their energy supply, production and business models. If a transition plan is not produced or if, after repeated engagement, is not consistent with our targets and commitments, we won't provide new finance."
Instead, the bank said it planned to accelerate its activities in renewable energy and clean infrastructure.
"This is significant given HSBC's status as Europe's largest bank, but it should not be surprising," Mr. Hegar said in the news release. "HSBC's new energy policy is a prime example of a broader movement in the financial sector to push a social agenda and prioritize political goals over the economic health of their clients. HSBC's policy clearly makes the firm a suitable candidate for listing under Texas law."
Mr. Hegar also cited the direct impact of HSBC's decision on his home state.
"HSBC's policies threaten Texas jobs, our state economy and our national security, and the tax dollars of hardworking Texans should not be leveraged to force policies that undermine Texas' fiscal health and stability," he said in the release.
According to data from the U.S. Energy Information Administration, Texas ranks as the top oil-producing state in the U.S., accounting for 42.4% of the country's total crude oil output in 2021.
In August 2022, Mr. Hegar unveiled a list of financial companies, including Blackrock, Credit Suisse and UBS Group, that are subject to its divestment provisions.
HSBC said in an emailed statement that it "does not consider itself to be a company which 'boycotts' financing of energy companies."
HSBC seeks a "balanced approach in the implementation of its net-zero commitment, with the primary aim being to support our customers in the transition from a high-carbon to a low-carbon economy," the statement added.
HSBC further said it will "continue to provide corporate lending and capital markets transaction support to energy-based customers that take an active role in the energy transition and engaging with our clients on their transition plans lies at the heart of our approach."
The Texas comptroller's office could be immediately reached for further comment.
