Dive Brief:
- The West Virginia State Treasury is slated to blacklist six of the nation’s largest financial firms from accessing state contracts, in view of perceived lending discrimination against the fossil-fuel industry.
- State Treasurer Riley Moore alerted BlackRock, Wells Fargo, JPMorgan Chase, Morgan Stanley, Goldman Sachs and U.S. Bank they would be placed on West Virginia’s restricted financial institution list within 45 days, according to letters sent Friday and seen by Politico.
- The firms have 30 days to provide the treasury with proof they have not turned their back on coal, oil and natural gas industries.
Dive Insight:
As the second-largest producer of coal and the fifth-largest producer of energy overall in the country, West Virginia is pushing back against an emerging trend among financial institutions to slash fossil-fuel funding to assuage activist investors concerned about environmental, social and governance (ESG) issues.
Moore announced in November he formed a 15-state coalition, with each member assessing whether financial institutions were boycotting their state’s traditional energy industry. The group represents more than $600 billion in public assets under management.
“I’m proud to continue to stand with my colleagues against these attacks on our states’ coal, oil and natural gas industries,” Moore said in the press release at the time. “These industries — which are engaged in perfectly legal activities — provide jobs, paychecks and benefits to thousands of hard-working families in our states and we will not stand idly by and allow our peoples’ livelihoods to be destroyed to advance a radical social agenda.”
Moore said in January he would stop using a BlackRock investment fund after the firm urged companies to embrace net-zero investment strategies, according to a press release.
“Divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” BlackRock CEO Larry Fink said in a letter. “And BlackRock does not pursue divestment from oil and gas companies as a policy. We do have some clients who choose to divest their assets while other clients reject that approach.”
West Virginia has adopted a key role in pushing back against an anti-fossil-fuel stance in financing. One of the state’s senators, Democrat Joe Manchin, refused in March to support onetime Federal Reserve nominee Sarah Bloom Raskin over concerns she would recommend the Fed allocate capital away from the fossil-fuel sector. Manchin’s stance was seen as the final blow to Raskin’s candidacy.
West Virginia is not the only state to stick up for legacy energy sources. Texas Gov. Greg Abbott signed a bill in June 2021 preventing the state from investing in businesses that have severed ties with the fossil-fuel industry. Most of the 19 financial institutions Abbott contacted in March 2021 responded by affirming their commitment to oil and gas industries, Politico reported.
Fossil-fuel lending, meanwhile, is not the only ESG issue prompting lawmakers to restrict bank ties. Dozens of House Republicans — and, later, senators — called for the termination of U.S. government contracts with Citi this spring, after the bank announced in March it will cover travel costs for employees seeking abortions.
