Texas and nine other Republican-led states are ratcheting up pressure on Wall Street’s diversity programs, asking firms about their policies on hiring and supplier selections as the Trump administration moves to gut DEI.
Texas Attorney General Ken Paxton wrote on Thursday to the firms saying they appear to “unlawfully advance discriminatory” diversity, equity and inclusion efforts, and demanded they respond to a series of questions about their programs. He said the companies may have breached their fiduciary duties by pursuing an “ulterior political motive or agenda.”
The letter was sent to Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and money manager BlackRock Inc.
“You appear to have embraced race- and sex-based quotas and to have made business and investment decisions based not on maximizing shareholder and asset value, but in the furtherance of political agendas,” Paxton said in a letter obtained by Bloomberg.
Paxton gave the firms 45 days to respond to the questions. “Before pursuing legal action, we are extending to each of you an opportunity to avoid a lengthy enforcement action,” he wrote.
Goldman Sachs and Citigroup declined to comment, while BlackRock and the other banks haven’t provided a response.
The letter comes after Trump, in his second day in office, ordered federal contractors to affirm they don’t “engage in illegal discrimination, including illegal DEI.” He directed government agencies to draw up a list of publicly traded companies for potential investigations into compliance violations.
JPMorgan and Goldman Sachs’ chief executive officers said on Wednesday that they will continue to focus on efforts to promote DEI in their workforces and customer bases. “We’re going to continue to reach out to the Black community, the Hispanic community, the LGBT community, the veterans community,” JPMorgan’s Jamie Dimon said.
The attorneys general cited pledges and goals made and set by finance firms since 2021 to bolster hiring of women and minorities. For example, JPMorgan pledged to hire 4,000 Black students by 2024 and Goldman set a goal of spending more than $1 billion on diverse vendors.
Corporate America ramped up its diversity efforts in the wake of the MeToo movement and the 2020 death of George Floyd that sparked nationwide unrest.
In November, Paxton led a move to sue BlackRock, Vanguard Group Inc. and State Street Corp. for allegedly breaching antitrust laws by using climate investing strategies to suppress coal production. BlackRock said the suggestion that it invested money in companies with the goal of harming them “is baseless and defies common sense.”
In Thursday’s letter, Paxton also asked firms about their net zero emissions commitments and use of shareholder votes and conversations with companies to shift away from fossil fuels.
For instance, the attorneys general asked BlackRock for details about communications it had with Climate Action 100+, an environmental group, and reasons for backing shareholder proposals focused on climate change. They also asked banks for information related to the steps they have taken to meet net zero goals.
Financial firms, including the six cited by Paxton, have quit climate groups since early last month.
The attorneys general that joined Paxton in sending the letter to the banks and BlackRock include those from Utah, Iowa, Indiana and Alabama.
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