January 4, 2023 - The state of Kentucky is warning a number of financial institutions, including BlackRock and JPMorgan Chase, to stop boycotting energy companies or the state may divest its funds in the months ahead.
Kentucky's legislature enacted a law in 2022 that required the state's treasurer's office to publish an annual list of financial firms found to be engaging in a boycott of energy companies. Under the law, state entities have 30 days to notify the treasurer's office if they have any direct or indirect holdings of listed firms, and must inform those firms. A listed financial institution has 90 days after receiving the notice to end the boycott or face divestment.
"When companies boycott fossil fuels, they intentionally choke off the lifeblood of capital to Kentucky's signature industries," Kentucky Treasurer Allison Ball said in a statement. "Traditional energy sources fuel our Kentucky economy, provide much needed jobs, and warm our homes. Kentucky must not allow our signature industries to be irreparably damaged based upon the ideological whims of a select few."
Fossil fuel production and use are vital to the state's economy. Ball's office noted there are 143,994 energy sector jobs in the state of Kentucky representing about 7.8% of the state's workforce.
Kentucky has the third-most operating coal mines in the country, trailing only West Virginia and Pennsylvania, making the Bluegrass State the seventh-largest coal-producing state in 2021. Kentucky's mines yielded over 26 million tons of coal, according to data from the Energy Information Administration (EIA).
Kentuckians are also fossil-fuel customers. About 71% of the electrical power consumed by Kentuckians in 2021 was coal-fired, the fourth-largest share in the country, and energy prices were the second-lowest of any state east of the Mississippi River, per the EIA.
BlackRock and JPMorgan Chase are two of the largest financial institutions in the U.S. and were among the 11 companies subject to Kentucky's warning.
BlackRock is the world's largest asset manager with about $8 trillion under management while JPMorgan Chase is America's largest bank with over $3 trillion in assets. Both firms pushed back against Kentucky's claims that they're boycotting energy companies.
JPMorgan Chase spokesperson Patricia Wexler told FOX Business in a statement: "The fact is that we are among the largest financiers of the U.S. traditional and renewable energy industries, including in Kentucky where we serve some of its largest energy companies and utilities. We believe our business practices are in line with Kentucky law, and we are hopeful a deeper look at these facts would lead to reconsideration."
A BlackRock spokesperson told Fox Business, "BlackRock's only agenda is delivering the best financial results for our clients. On behalf of our clients, we have invested approximately $276 billion in energy companies globally. BlackRock does not boycott energy companies and will continue to be investors across the energy sector."
Efforts by investment banks to push environmental, social, and governance (ESG) standards that often promote investment in green energy ventures at the expense of fossil fuel firms have unnerved lawmakers in states that are major producers of coal, oil, and natural gas.
Those economic considerations along with concerns that ESG investment strategies may diminish investors' returns have led a number of states to divest state assets from financial firms advocating for such policies.