By: Ken Chase.
Estimated reading time: 3 minutes
The state of West Virginia has barred five of the largest financial firms from conducting new business with the state, after the state determined that the companies had been effectively boycotting energy companies like those engaged in coal mining. The five companies include BlackRock Inc, Morgan Stanley, Wells Fargo, JPMorgan Chase, and Goldman Sachs.
A sixth firm, U.S. Bancorp, had originally been identified by the state as a potential target for the ban. West Virginia officials removed Bancorp from the list, citing a change in the company’s policies on coal company financing. For its part, the bank claims that its policy changes were made prior to West Virginia’s passage of its anti-energy boycott bill earlier this year.
All six companies had been warned in June that the state intended to blacklist them from accessing contracts with the state if they persisted in their efforts to restrict business with the fossil fuel industry. That warning came as SB 262, the law enabling the state’s Treasurer to act against financial firms that boycott fossil fuel companies, went into effect.
Laws designed to protect fossil fuel companies’ access to capital have been passed in a number of Republican-led states in 2022, in response to a growing trend by companies to take sides in various social debates about climate change, gun rights, and other contentious issues. According to a recent Reuters analysis, 17 “conservative” states have proposed or passed similar legislation this year.
For many in those states, the passage of those laws is seen as the best option to prevent giant companies from using their capital to force others to bow to their political agendas. West Virginia State Treasurer Riley Moore told Reuters that, “They’re using the power of their capital to push their ideas and ideology down onto the rest of us.”
While the five banned financial giants all claim that they are not engaged in any ban on fossil fuel financing, many supporters of the industry disagree. Moreover, there have been growing calls from Washington D.C. Democrats and media outlets for the world’s largest banks to do more to deprive oil, coal, and gas companies of the financing they need to maintain and grow their operations.
In fact, two Democrat Senators, Edward Markey of Massachusetts and Jeff Merkley of Oregon, proposed legislation last November that would have mandated that the Federal Reserve force major lenders to end financing of any projects or companies that involve the use of so-called fossil fuels.
On Thursday, spokespersons for Wells Fargo, Morgan Stanley, BlackRock, and JPMorgan Chase all issued statements disagreeing with the West Virginia decision. For its part, BlackRock – a major proponent of the Environmental, Social, and Governance push, claimed that the company “does not boycott energy companies, and we do not pursue divestment from sectors and industries as a policy,”
