The state Senate passed a bill that would allow steps by the state Treasurer to block banking West Virginia’s public dollars with financial institutions hedging against fossil fuel investment.
“If you’re going to use the citizens’ West Virginians’ money against them, go do business somewhere else,” said Senate Finance Chairman Eric Tarr, R-Putnam.
Senators voted 31-2 in favor of Senate Bill 262, which would direct the Treasurer to keep a list of financial institutions that steer clear of investments in fossil fuel companies, possibly resulting in decisions to withhold state deposits from those bankers.
Tarr cited the millions of tons of coal mined last year in West Virginia, ranking the state second in the nation. Severance taxes from that coal go toward support of government services, he noted.
“There are banks that are taking action to go in and weaponize the earnings they make off of your constituents’ taxpayer dollars against them,” Tarr said. “This is a bill to protect every West Virginian, whether they work in the energy sector or not.”
Senators Eric Nelson, a Republican, and Owens Brown, a Democrat, were the two who voted against the bill, with each citing the possibility of unintended consequences.
Nelson, R-Kanawha, said the bill “obviously is a sincere effort to show our strength and what we care about in our energy sector in west Virginia, whether it’s coal or natural gas. But this bill comes to us with some financial consequences or financial concerns.”
Nelson said he drew some reassurance that the bill specifically does not involve the billions of dollars in state pension funds, which are expected to draw favorable investment returns for retirees. And he praised language in the bill meant to protect financial institutions that make investment decisions purely on economic grounds.
But Nelson said caution led to his no vote. He expressed concern about the signal the bill could send to financial institutions making other investments in sectors of West Virginia’s economy.
“I stand up with some concerns as it relates to what kind of message does this potentially send out nationally,” Nelson said.
“I think our biggest concern here as a legislative body should be how can we improve capital needs in our state, not only in our energy sector but in all sectors, especially as we look to diversify.”
Brown, D-Ohio, called the bill “bad policy.”
“What happened to that belief in the free market? It chooses winners and losers,” he said.
“What about the mantra of the Republican Party of the government getting out of the way of business? How far can government intrude upon private business? This is a bad bill.”
The argument over economics and policy has more sizzle than the procedures that would be established by the bill.
The bill authorizes the Treasurer to compile a list of companies with policies against investments in fossil fuel industries like coal or gas. Then, the Treasurer could use the list to disqualify companies for banking contracts.
About $8 billion of West Virginia’s short-term banking deposits could be affected.
“All this is is a statement. It does not restrict any business. It does not restrict a bank from investing in West Virginia,” said Senate Energy Chairman Randy Smith, R-Tucker. “All this is a statement to a bully, and we all have bullies in our life.”
West Virginia’s bill is being debated against the broader context of decisions by major investment companies like BlackRock.
BlackRock chief Larry Fink wrote in an annual letter to corporate leaders that the company has a fiduciary responsibility to engage with companies about the shifting tide of climate. But the letter explicitly stated that BlackRock itself is not divesting from carbon producers.
“Divesting from entire sectors – or simply passing carbon-intensive assets from public markets to private markets – will not get the world to net zero. And BlackRock does not pursue divestment from oil and gas companies as a policy,” Fink wrote in the letter.
BlackRock has maintained it has a fiduciary responsibility to protect clients’ money and protect clients’ investments by openly discussing the financial effects of climate change.
State Treasurer Riley Moore has advocated for West Virginia’s bill and has made a series of appearances on high-profile cable news programs to discuss financial institutions hedging against fossil fuel investment.
This week on West Virginia MetroNews’ “Talkline,” Moore also blasted BlackRock. “They’re hostile to coal and gas, and they don’t want to see those industries flourish or exist in the near future,” he said.
“I’m not going to pay BlackRock with our dollars to destroy our economy. That doesn’t make sense,” Moore said. “I think there’s a clear conflict of interest in having financial institutions, which have boycotts, essentially, against the fossil fuel industry handling taxpayer dollars.”
Moore said the policy does not constitute government interfering in capital markets.
“I, as the state Treasurer of West Virginia, I’m a market participant. I’m not a market regulator at all. And what I’m doing is stating our preferences in who we would prefer to do business with. So I’m not picking winners or losers,” Moore said.
“If anything these, massive financial institutions are picking West Virginia a loser. And West Virginia is not a loser; we’re a winner.”
What went into the decision to divest from BlackRock? @RileyMooreWV explains the reasoning behind that decision to @DaveWilsonMN. WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/JkeB8YiX9E
— MetroNews (@WVMetroNews) January 25, 2022