West Virginia has taken the dramatic move of deeming five financial institutions ineligible for state banking contracts on the grounds that they “boycott” fossil fuel companies.
The restricted financial institution list released Thursday includes BlackRock, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo — many of the biggest financial firms in the world. The determination was made by West Virginia Treasurer Riley Moore’s office and is effective Thursday.
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As the blacklist goes into effect, all five firms will no longer be eligible for state contracts and any existing contracts will be void. The news means the firms will lose access to $18 billion in annual inflows and outflows.
“While the ‘Environmental, Social and Governance’ or ‘ESG’ movement might be politically popular in California or in New York, financial institutions need to understand their practices are hurting people across West Virginia,” Moore said. “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.”
The move comes after West Virginia’s legislature passed a bill authorizing the state’s treasurer to produce a list of firms that refuse to do business with fossil fuel companies and to deny those firms from consideration for state financial contracts. The bill became law and went into effect last month, empowering Moore to act.
“It’s real simple,” state Sen. Rupert Phillips, the bill’s chief sponsor, told the Washington Examiner earlier this year. “Why should we take our tax dollars that our coal miners and our gas industry have produced and invest it into a bank that is trying to shut them down?”
Moore’s office said it determined which firms it would place on the list by evaluating publicly available statements from them. The firms can be removed from the list “if the institution demonstrates that it has ceased all activity that boycotts energy companies.”
The move is drastic but is part of a broader pushback from red states against certain financial firms over environmental, social, and governance policies.
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Last year, Texas Republican Gov. Greg Abbott signed a bill that outlawed state investments in businesses that sever ties with the oil and gas industry. Abbott additionally signed legislation banning state and local governments from working with corporations whose policies restrict the firearms industry.
Environmental, social, and governance policies have risen in prominence alongside the rise of so-called stakeholder capitalism versus the traditional shareholder capitalism model. The idea of stakeholder capitalism has been embraced by many large corporations and is the notion that, in general, companies shouldn’t care just about their bottom lines but also about a wider responsibility to society.