By Pete Schroeder
June 15, 2022 - Six of the nation's largest financial institutions, including JPMorgan Chase (JPM.N), BlackRock Inc (BLK.N), and Wells Fargo (WFC.N), may no longer be allowed to do business with the state of West Virginia, after its treasurer warned them they were facing bans over perceived boycotts of the fossil fuel industry.
State Treasurer Riley Moore sent letters to the firms, dated June 10, informing each of them they are facing a prohibition on state banking business, after his office determined they were "engaged in a boycott of energy companies" based on public information. Copies of the letters were reviewed by Reuters following a public records request.
Letters were also sent to Morgan Stanley (MS.N), US Bancorp (USB.N) and Goldman Sachs (GS.N). Spokespeople for the firms identified either declined to comment or did not respond to requests for comment.
The threat from West Virginia, where coal is a major industry, is the latest front in a brewing battle between banks and Republican-led states. Republican policymakers are threatening to curtail access to state business over industry policies they believe unfairly discriminate against certain industries, like fossil fuels and firearms. The pushback is part of a broader controversy over environmental, social and corporate governance (ESG) issues, which the financial industry has been quick to embrace in response to investor demand while critics say it could limit credit to legal industries.
West Virginia is one of several states, including Texas, to adopt or consider new laws aimed at punishing banks they believe to be discriminating against such industries via ESG policies. Moore has the authority to bar banks from state business under a new state law he backed, which the legislature passed in March.
"At a time when energy demand is skyrocketing and consumers are bearing the brunt of generationally high inflation, it makes absolutely no sense for financial institutions to cut off capital and financing to these legal, profitable industries simply because they don’t align with their radical social and political agendas," said Moore in a statement when West Virginia passed the new law in March.
"This law now puts the banking sector on notice: If you refuse to do business with our people, we won’t give you our people’s business."
According to Moore, the companies will be barred from state business 45 days after the letters were sent, but have the option to appeal the decision and provide information showing they are not boycotting that particular sector.