Treasurer puts financial giants on list of fossil fuel boycotters, severing banking relations

The state Treasurer’s Office is informing five of America’s largest investment companies that they are ineligible for some West Virginia contracts over their environmental policies.

State Treasurer Riley Moore concluded that BlackRock, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo are engaged in boycotts of fossil fuel companies and are no longer eligible to enter into state banking contracts with the Treasurer’s Office.

Moore, in a statement today, described a duty to act in the state’s best interests when choosing financial services for West Virginia.

“Any institution with policies aimed at weakening our energy industries, tax base and job market has a clear conflict of interest in handling taxpayer dollars,” Moore said.

The financial institutions received earlier warnings and each responded with letters disputing the Treasurer’s interpretation of their policies. One company, U.S. Bancorp, managed to persuade the Treasurer that it had changed its policies and should not be on the list.

BlackRock today objected to the list: “We disagree with Treasurer Moore’s determination. BlackRock does not boycott energy companies, and we do not pursue divestment from sectors and industries as a policy. We offer our clients choice on a range of strategies and they decide how to invest their money. We have a fiduciary duty to help maximize long-term returns for our clients.”

The Treasurer’s conclusions came about after this year’s passage of Senate Bill 262, directing 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.

In preparing the list, the Treasurer’s Office reviewed publicly available environmental and social policy statements published by financial institutions that are currently authorized to do business with West Virginia as approved state depositories or sweep account providers for short-term funds.

The Treasurer’s Offices manages roughly $18 billion in state government receipts on an annual basis.

JPMorgan had an account with $46.2 million of state money flowing into it over the last fiscal year, according to the Treasurer’s Office, and that account is now disqualified. BlackRock, which was discontinued from managing Board of Treasury Investments funds back in January, had an account with $1.5 billion in state funds flowing into it last year.

West Virginia’s new law defines a “boycott” as refusal to deal with a company without “a reasonable business purpose” — particularly when the company seeking financing does business in fossil fuels markets or does business with other companies involved with fossil fuels.

A reasonable business purpose is then defined as promoting the financial success or stability of a financial institution, mitigating risk to a financial institution, complying with legal or regulatory requirements or limiting the liability of a financial institution.

The law indicates the Treasurer may rely on information such as a financial institution’s certification that it is not involved in a boycott of energy companies, publicly available statements or information made by the financial institution or its top representatives or information published by a state or governmental entity.

Six financial institutions were sent letters last month to say they had been identified as potentially engaged in boycotts of energy companies.

The institutions then had 30 days to submit additional information disputing their potential inclusion on the Restricted Financial Institution List. All six institutions submitted responses, which the Treasurer reviewed alongside each institution’s public policy statements.

Each of the financial firms denied boycotting fossil fuel companies.

“Let us state categorically at the outset that Morgan Stanley does not boycott energy companies,” wrote representatives of that company. “In fact, Morgan Stanley currently has over a dozen fossil-fuel clients that have a meaningful presence in West Virginia.”

To emphasize that point, Morgan Stanley cited its inclusion on a list of “Dirty Dozen” top financiers of fossil fuels from 2016 to 2021 in a recent report called “Banking on Climate Chaos” by an environmental coalition called Rainforest Action Network. That list also included some firms on warning by the state treasurer, including JP Morgan and Wells Fargo.

Out of the six financial institutions initially noticed, U.S. Bancorp was not placed on the list because it demonstrated to the Treasurer that it has eliminated policies against financing coal mining, coal power and pipeline construction activities from its Environmental and Social Risk Policy.

“Each financial institution placed on the Restricted Financial Institution List today has published written environmental or social policies categorically limiting commercial relations with energy companies engaged in certain coal mining, extraction or utilization activities, rather than considering the financial or risk profile for each company,” Moore stated.

“These policies explicitly limit commercial engagement with an entire energy sector based on subjective environmental and social policies.”

Moore has cited the continued importance of fossil fuels to West Virginia’s economy as a main reason behind the state’s policy.

West Virginia annually collects hundreds of millions of dollars in coal and other fossil fuel severance taxes, typically representing the third-largest revenue source for the state’s General Revenue Budget.

During the most recent fiscal year, the nearly $769 million in severance taxes paid by coal, oil and natural gas companies accounted for 13 percent of the $5.89 billion in General Revenue funds collected by the state. The Treasurer’s Office noted that does not include income and other taxes also collected from the employment and economic activity these fossil fuel industries generate.

“I simply cannot stand by and allow financial institutions working against West Virginia’s critical industries to profit off the very funds their policies attempt to diminish,” Moore stated today.

Morgan Stanley, in its response early this month, said it has tailored risk-based approaches to fossil fuel-based energy sectors for its investors. And, like each of the others, Morgan Stanley says those approaches are “reasonable business purposes.”

Company representatives offered to come to West Virginia to talk it over.

“If, after having reviewed our response, you have not concluded that we should be removed from the RFI list, we would appreciate the opportunity to come to West Virginia and meet with you to discuss this topic more fully, including a review of the fossil fuel sector in West Virginia,” Morgan Stanley wrote.

JP Morgan’s response earlier this month suggested West Virginia might come to regret this move.

“It is regrettable that West Virginia is cutting itself off from parts of the market and attempting, via government action, to control  the  decisions made by private businesses,” JP Morgan representatives wrote.

“There are many examples across the country where this kind of state intervention ends poorly, including imposing unnecessary costs and  additional expenditure of taxpayer funds.”





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