Texas Blames ESG Goals in Probe of Xcel Over 2024 Wildfires
(Bloomberg) -- The Texas attorney general is investigating utility Xcel Energy Inc. and its contractor for two wildfires that devastated the state last year, saying the companies may have prioritized environmental and diversity goals over maintenance and safety.
“It is unconscionable that utility companies might have sacrificed infrastructure maintenance, public safety and the well-being of our Texas communities for radical ESG and DEI goals,” Attorney General Ken Paxton said in a statement Friday.
Xcel shares fell as much as 4.5% after the investigation was announced before rebounding and were down 0.16% to $72.23 at 2:03 p.m. in New York.
Xcel has acknowledged that its infrastructure was likely involved in starting the the Smokehouse Creek fire, which charred more than 1 million acres in the Texas Panhandle, destroying ranches and killing thousands of livestock animals and two people. However, the company does not believe it played a role in the Windy Deuce fire.
Climate change has ripened conditions for more frequent and devastating wildfires. Across the US, utilities have been facing mounting pressure to better protect their equipment. And while power companies have been found to cause blazes in recent years, there’s no evidence that’s come because of prioritizing other initiatives.
The attorney general’s offices issued civil investigative demand letters to Xcel, its utility Southwestern Public Service Co. and its contractor Osmose Utilities Services.
Xcel said in a statement that it will work with state officials to better understand the cause of the fires, though the company disputes claims that it acted negligently. Xcel has already paid $123 million in settlement agreements to victims of the Smokehouse fire. An Osmose representative didn’t respond to a request for comment.
Republican-led states have targeted companies and financial institutions for adopting environmental, social and governance policies, or ESG, that limit business with the firearms or fossil fuels industries. They’ve also criticized diversity, equity and inclusion initiatives, or DEI.
Texas restricts government work with companies that discriminate against firearms entities or boycott oil and gas companies. The ESG push at investment firms, pension funds and law practices has faded somewhat, partly because of efforts to avoid attacks by President Donald Trump and Republicans.
Xcel has set a goal of net zero carbon emissions by 2050, which is common among utility companies. The company faces lawsuits from victims of the Smokehouse fire, and is set to go to trial next month over its role in the 2021 Marshall Fire in Colorado, which it denies sparking.
(Updates share prices in third paragraph and adds company comment in seventh paragraph.)
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