West Virginia announced Thursday morning that five major financial institutions, including Goldman Sachs and JP Morgan, would be banned from doing business with the state because they stopped supporting the coal industry.
West Virginia treasurer Riley Moore has announced that the state will break banking ties with major Wall Street companies by opposed efforts to reduce dangerous global warming emissions. This is the first migration.
This year, West Virginia enacted a law defended by Mr. Moore, empowering him to ban financial institutions from doing business with the state if it turns out to be “boycotting” fossil fuels.
Last month, Moore sent a letter to six financial companies informing them that they could be banned from state-owned enterprises and gave them a 45-day response. In addition to Goldman Sachs and JP Morgan, Moore wrote to three other banks (Morgan Stanley, Wells Fargo and US Bancorp) and BlackRock, the world’s largest asset manager.
All six companies, with the exception of US Bancorp, were banned from doing business with West Virginia on Thursday. The move, which has blocked West Virginia Senator Joe Manchin’s efforts to pass President Biden’s key climate legislation for months, will radically expand federal support for renewable energy. It happens just hours after announcing a surprising deal.
Goldman Sachs, JP Morgan, Morgan Stanley and Wells Fargo have been reducing their stakes in BlackRock’s actively managed coal companies since 2020, while raising funds for new coal projects. It has publicly stated that it has significantly reduced it.
Such moves are becoming more common on Wall Street as large financial companies move to reduce their financial exposure to industries such as coal, which is a major source of global warming emissions, and their profitability has declined in recent years. It is becoming more and more common.
Many large companies, including those that Moore has banned state-owned businesses, are also willing to significantly reduce their emissions over the next few decades and help them move to a less fossil-fuel-dependent economy. I promise to play a role. ..
Moore said US Bancorp has avoided being included in the list of so-called restricted financial institutions because it has decided to exclude policies that oppose coal lending from its environmental and social risk policies.
Coal is the most polluted fossil fuel. Coal production in the United States has been declining for over a decade, largely due to the expansion of low-cost natural gas.
According to Moore, some of the target financial institutions are currently working with West Virginia’s public university system to form banking relationships with the state, including JP Morgan, one of the state’s 25 designated depository institutions. I’m out.
Moore said the deal would end by the end of the year and the state would begin looking for new service providers with no policies targeting the coal industry. The law does not affect West Virginia’s pension plan holdings.
“We value the relationship between West Virginia and its clients and disagree with this decision,” Wells Fargo said in a statement.
Morgan Stanley was “disappointed” with the decision and said he would “not boycott fossil fuel energy companies.”
Goldman Sachs, BlackRock and JP Morgan did not immediately respond to requests for comment.
In an interview, Moore explained the enforcement of the new law in an effort to remedy what he said as a conflict of interest inherent in his state, the second largest coal producer in the country after Wyoming. ..
“We are giving money to financial institutions generated from the fossil fuel industry,” he said. “At the same time, they are trying to reduce their funding. There is a clear conflict of interest.”
In 2020, BlackRock announced in an annual letter to its customers that it would target the coal industry and that its management funds would be sold by the coal company.
“Charcoal is significantly carbon-intensive, less economically viable and highly regulated due to its environmental impact.” I have written The company’s executive committee, led by CEO Larry Fink. “We do not believe that long-term economic or investment grounds justify continued investment in this sector as the global energy transformation accelerates.”
Goldman Sachs is one of the banks that said it would stop lending to most new coal projects.
“Coal-fired power generation is one of the largest sources of air pollutants, including greenhouse gas emissions, and has significant environmental, health and safety implications for our communities,” he said. statement On the bank’s website. “But coal-fired power remains an important source of energy, contributing to a reliable and diverse energy supply, especially in developing economies.”
All five Moore targets support environmental, social and governance principles: ESG. This is a comprehensive term that has become a lightning rod for criticism from conservatives.
This year, Moore said BlackRock was over-focused on ESG priorities, withdrawing approximately $ 20 million of the state’s working capital from BlackRock.
Opposition to ESG is growing in Republican circles. Former Vice President Mike Pence, a 2024 Republican presidential candidate, recently ESG “suppression”..
Republicans in the House and Senate have recently opposed a growing move to integrate climate risk deeper into the financial system.
And more states are ready to take action against financial institutions retreating from fossil fuels.
Republicans in the other 12 states have submitted bills similar to those in force in West Virginia, and the governors of four states, including Texas and Oklahoma, have signed such legislation.
On Wednesday, Florida Governor Ron DeSantis participated in the campaign and proposed a law prohibiting financial companies managing state pension funds from considering environmental factors when making investment decisions.
The coal business is declining, but it’s still a big business in West Virginia. According to the state, taxes from the coal and fossil fuel industry are the third largest source of funding for West Virginia. In the most recent fiscal year, the state collected a separate tax of approximately $ 769 million from coal and other fossil fuel companies. That’s 13 percent of the $ 5.89 billion state fund collected.
Moore did not say whether he accepted the scientific consensus that emissions from burning fossil fuels would lead to catastrophic planetary warming. Instead, he said, it was his responsibility to protect the lives of West Virginia citizens, if at all.
“What costs are we willing to impose these types of restrictions on human prosperity because they relate to access to cheap and reliable electricity?” He said. “As West Virginia citizens, our ability to help move the country with the natural resources we have is in the interests of us as well as the country as a whole.”
