POLITICO: Did they jump or were they pushed?

Red-state regulators have the financial sector on the defensive over ESG, but they may be overstating their success in bending Wall Street to their will.

West Virginia is one of Republicans’ main fronts in their war against so-called “woke” investing. Its 2022 law made it the first state to blacklist financial services companies over alleged discrimination against the fossil fuel sector.

While West Virginia Treasurer Riley Moore used the law to kick out Wall Street giants, including BlackRock and Goldman Sachs, he said its highest value was in nudging banks to drop their anti-fossil fuel positions — specifically, getting U.S. Bank to go back on its policy to stop financing coal-fired power plants.

Moore said U.S. Bank’s about-face was “the most important point” of the effort. (West Virginia is the country’s No. 2 top coal producer.)

But it turns out U.S. Bank — the nation’s fifth-largest commercial bank — had already adjusted its coal stance, months before the law took effect in June 2022, according to documents obtained by the investigative group Documented.

The bank updated its environmental and social risk policy statement in December 2021 to delete a ban on participating in the development of new coal mines. (It kept coal, metals mining, oil and gas on a list of sectors requiring increased “due diligence,” though.)

Moore, who is running for Congress in 2024, implied that U.S. Bank changed its policy because of the threat of being on the boycott list. He removed the company from his initial list after a June 2022 meeting with bank officials and an official written response in July. “That is a win,” he said of the bank’s changed position.

His victory lap resonated with other state officials.

The State Financial Officers Foundation, an influential anti-ESG group, credited Moore with U.S. Bank having “stepped up and [done] what was right.” The law also spurred copycat bills in Wyoming and North Dakota this year (both of which failed to advance).

But the timeline is muddy around what many anti-ESG advocates see as their biggest concrete victory.

A spokesperson for U.S. Bank pushed back on any assertion the bank changed its policy as a result of West Virginia’s law. Lee Henderson said the policy change came as a result of a “comprehensive risk management process” that aims to “operate in the best interests of our employees, customers and communities, while seeking to maximize long-term shareholder value.”

Moore’s office said the bill had been in the works since mid-2021, so banks had plenty of warning.

"[T]he fact this legislation was coming down the pike was telegraphed for quite some time in advance of its ultimate introduction,” spokesperson Jared Hunt said in an email. “That’s why Treasurer Moore feels confident our legislation played a part in banks reconsidering fossil fuel capital decisions.”

West Virginia remains on the anti-ESG prowl. Last week, state lawmakers sent Republican Gov. Jim Justice a bill that would require the state investment management board to consider only “pecuniary interests” when taking shareholder votes — which would exclude ESG factors, unless a “prudent investor” would deem them material.

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Paid for Moore for West Virginia

Treasurer, Arch A Moore III

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