By Steven Allen Adams
January 20, 2022 - On the heels of the state’s top banker taking action against an investment group pulling its funding from fossil fuel industries, a legislative committee took further actions against banks and investment firms.
The West Virginia Senate’s Energy, Industry and Mining Committee recommended Senate Bill 262 in a voice vote Tuesday afternoon, sending the bill to the Senate Finance Committee next.
The bill, sponsored by Sen. Rupie Phillips, R-Logan, and supported by State Treasurer Riley Moore, would authorize the State Treasurer to restrict state banking contracts with any bank or investment group that refuses to deal with coal or natural gas companies or terminates contracts with existing fossil fuel companies as a way to punish the companies for engaging in extractive industries.
State Treasurer Riley Moore is sworn in before his testimony Tuesday before the Senate Energy, Industry, and Mining Committee.
Photo by Steven Allen Adams
SB 262 would require the State Treasurer to create and maintain a list of restricted financial institutions annually or as often as possible. The list must be made public with written notice to the financial institutions informing them they are on the restricted list.
Any bank, banking associations, investment house, savings and loan, credit union or savings bank on the restricted financial institutions list would be unable to enter into new banking contracts with the state or remain in current contracts. Financial institutions that can show they are not or no longer engaged in energy company boycotts would be removed from the list.
Speaking to the committee Tuesday, Moore said the bill is only aimed at state banking contracts with private financial institutions. Moore already has authority to back out of banking contracts with 30-day’s notice.
“There are banks out there that will no longer lend to them or make it more difficult for coal and gas in the State of West Virginia to continue their operations,” Moore said. “What this list does is provide transparency into how my activities, if we’re going to ask financial institutions to certify they’re not boycotting the fossil fuel industry, if they’re not able to meet that certification, then they would be ineligible for a banking contract in West Virginia.”
The bill includes an exemption for normal business purposes, such as final loan decisions to fossil fuel companies. But it would prohibit financial institutions for stating up front they will not lend to fossil fuel companies.
State Sen. Owens Brown, D-Ohio, raised some concerns about the bill.
“Don’t you think that would be a slippery slope when you’re beginning to choose winners and losers in this process,” Owens asked.
“These financial institutions have already picked our industries as losers,” Moore said. “This is specifically unique, since these banks are handling our taxpayer dollars. More to the point, they’re handling severance tax dollars of the industries of which they are boycotting. There is a clear conflict of interest there.”
Texas passed a similar bill earlier this year and Moore said Indiana is set to introduce an anti-boycott bill soon. West Virginia has $7.2 billion under management between 30 depositors. Moore told committee members that if the bill should pass, it could affect two of those depositors.
Moore announced Monday he was already taking action against a financial institution due in part to its statements on environmental issues. According to a press release, the Treasurer’s Office informed BlackRock Inc., an investment management company, the state would no longer do business with the company.
Moore cited reports that BlackRock was urging companies it invested in to commit to “net zero” energy policies, reducing their greenhouse gas footprint and relying more on green sources of energy.
In his annual letter to company CEOs released Monday, BlackRock Chairman and CEO Larry Fink said that his net zero philosophy was due to capitalism, not environmentalism. With many companies actively trying to reduce their climate footprint, Fink said his company’s investment strategy was reflecting the reality of the moment and the market.
“Most stakeholders, from shareholders, to employees, to customers, to communities, and regulators, now expect companies to play a role in decarbonizing the global economy,” Fink wrote. “We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients. That requires understanding how companies are adjusting their businesses for the massive changes the economy is undergoing.”
In November, Moore and 15 other states wrote an open letter to the U.S. banking industry warning them against pulling investments from fossil fuel industries or making decisions about investments based on political considerations, calling it “woke capitalism.” According to the letter, Moore and the coalition said they would take collective action against banks who boycott investing in coal, oil, natural gas and other fossil fuels.
Last May, Moore and 14 state financial officers sent a letter to John Kerry, President Joe Biden’s special presidential envoy for climate, raising concerns about White House pressure on banking and financial institutions to halt lending to the fossil fuel industry. Moore accused Kerry of pushing for divestment that will force banks to discriminate against coal, oil and natural gas companies.