A Texas official added HSBC Holdings [HSBC:US] to a list of companies facing energy sanctions, as the state believes these companies are too focused on transitioning to clean energy, as reported by Reuters on March 21. Republican-led U.S. states have accused companies of prioritizing ESG policies over their financial obligations to shareholders. As a result, Texas may prevent its government entities from investing in one of Europe’s largest banks. Texas Comptroller Glenn Hegar stated that HSBC’s new energy policy exemplifies a larger trend in the financial sector of prioritizing political goals over the economic wellbeing of clients. In December, Florida’s chief financial officer announced that his department would divest USD2bn of its assets managed by BlackRock Inc [BLK:US], a significant move by a state opposed to the asset manager’s ESG policies.

The recent move by Texas to add HSBC to an energy sanctions list has several implications. Firstly, HSBC may face restrictions in doing business with Texas’ governmental entities due to being on the list. This could limit HSBC’s ability to conduct transactions with the state’s agencies and entities, potentially impacting the bank’s business in the state. Additionally, this move by Texas highlights the divide between Republican-led states and companies that prioritize ESG policies over their financial obligations to shareholders. As more states take similar actions, it could create challenges for companies looking to balance their ESG objectives with their financial responsibilities. 

Sources: 

https://www.reuters.com/business/finance/texas-adds-hsbc-energy-sanctions-list-2023-03-21/

https://www.reuters.com/business/finance/florida-pulls-2-bln-blackrock-largest-anti-esg-divestment-2022-12-01/