In Brief
West Virginia State Treasurer Riley Moore recently alerted six financial institutions about potential violations of state law regarding their involvement in actions against fossil fuel companies. Moore stated, appear to “be engaged in boycotts of fossil fuel companies,” according to West Virginia law.
The banks, including BMO Bank, Citibank, Fifth Third Bank, Northern Trust, TD Bank, and HSBC, were given a deadline of 30 days to respond to the treasurer’s notice.
Failure to respond within this timeframe could result in their addition to the state’s restricted financial institution list. This law, reminiscent of similar legislation in Texas, renders institutions on the list ineligible for state banking services contracts.
Insight
In 2022, Treasurer Moore introduced the Restricted Financial Institution List, which was later approved by the state legislature, restricting five major institutions: BlackRock, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo.
This recent update comes after Moore’s office expanded its research into financial institutions potentially engaging in actions against the state’s coal, oil, and natural gas industries. Moore emphasized that West Virginia’s legislation aims to safeguard taxpayer funds from harmful Environmental, Social, and Governance (ESG) policies.
Moore said in a statement West Virginia “took an unprecedented stand” to protect financing of the state’s coal, oil and natural gas industries with the law’s passage in 2022, and the latest actions represent the state’s “continued commitment to protect taxpayer dollars from harmful ESG policies.”
“While we have been effective in our fight against ESG activism, we must remain vigilant to ensure we do not entrust state funds to banks that are engaged in coordinated political efforts to destroy our state’s critical industries,” Moore said.
The treasurer’s objective with the list and its notices is to push companies towards fairer treatment of the state’s critical industries. He highlighted Bank of America’s reversal on its coal financing pledge as a positive development, even though the bank isn’t currently on the state’s list nor received a notice. West Virginia is among several states, including Texas, Kentucky, Florida, Louisiana, Oklahoma, and Missouri, enacting similar measures against institutions boycotting the fossil fuel industry.
Despite these efforts, such bans have proven costly for states. A January 2023 estimate by Econsult Solutions Inc. revealed that Texas incurred additional costs ranging from $303 million to $532 million due to laws barring companies boycotting fossil fuels or firearms from working on municipal bonds. Applying Texas’ findings to West Virginia, ESI projected increased interest costs of $9 million to $29 million for state bonds issued in 2022, albeit targeting a narrower group of communities than Texas’ legislation.
