By Jordan Wolman
June 14, 2022 - Six of the nation’s biggest financial firms have been told that they will be denied access to state contracts in West Virginia as Republican leaders there continue their pushback on what they see as bias against the fossil fuel industry.
BlackRock Inc., Wells Fargo & Co., JP Morgan Chase & Co., Morgan Stanley, The Goldman Sachs Group Inc. and U.S. Bancorp are due to be placed on the West Virginia’s Restricted Financial Institution List in 45 days, according to letters sent to the companies on Friday by state Treasurer Riley Moore, a Republican. POLITICO reviewed the letters following a public records request.
Placement on the list would leave the firms ineligible to enter into or remain in banking contracts with the state. They have 30 days to respond with information showing they’re not boycotting the fossil fuel industry.
Moore acted under a state law passed this spring that he said is designed to “push back against unfair discrimination against our coal, oil and natural gas industries by the financial sector,” Moore said.
West Virginia ranks No. 2 in coal production, No. 5 in natural gas production and No. 5 in total energy production, according to the Energy Information Administration.
The effort is part of a larger campaign being waged by red states to push back against ESG financing, with Republican leaders claiming that banks are choosing politics over sound lending practices by reducing their funding of fossil fuel projects to appease activist investors.
West Virginia became the first state to cut ties with a firm over ESG policy when Moore announced earlier this year that he was pulling out of a BlackRock investment fund. BlackRock manages $10 trillion in assets, while Moore’s office oversees $8 billion in operating funds — only a fraction of which was invested in BlackRock. He doesn’t control the state’s pension fund, which invests with BlackRock.
Some finance leaders have disputed claims of bias. BlackRock CEO Larry Fink, for instance, has argued that the company is not pursuing a blanket divestment policy — but is advocating for investors to consider climate risk and cut their emissions.
“Divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” Fink wrote.
That hasn’t slowed Moore, who leads a 15 state-coalition that is organizing to punish banks who treat the fossil fuel industry differently from other sectors. The group controls $600 billion in assets.
Texas Gov. Greg Abbott last year enacted a law that will bar his state from investing with companies deemed to be boycotting fossil fuels. After letters went out to 19 institutions in March, most responded by declaring their commitment to the fossil fuel industry. That list is expected to be complete by Sept. 1.
Kentucky Gov. Andy Beshear, a Democrat, signed a similar bill into law earlier this year.