Banks Against Fossil Fuel Financing: States Stand Up
By Riley Moore, State Treasurer of West Virginia
America must return to energy independence. It must happen immediately, and it must involve a full embrace of all energy options, including our critical fossil fuel industries – coal, oil and natural gas.
As State Treasurer of West Virginia, I know how vital the coal industry is to securing not only our energy future, but the future of our American manufacturing base. But it’s been under attack by politicians, regulators and corporate interests who have used the guise of globalism and climate change to weaken the industry.
For too many years, the U.S. offshored steel and manufacturing jobs to China, punished our fossil fuel industries with burdensome regulations and allowed countries like Russia to become global powerhouses for energy and raw materials. This led to the decline in the American manufacturing base, increased power costs for manufacturers and left our nation reliant on hostile foreign powers for raw materials and the global supply chain.
President Joe Biden and his administration have made no secret of their hostile attitude toward fossil fuels. From the day he took office, he’s shut down pipeline operations, such as the Keystone XL, reinstated U.S. participation in the Paris Climate Accords and has relentlessly pressed Congress to pass Green New Deal climate change initiatives.
Since taking office, President Biden has had his Special Presidential Envoy for Climate John Kerry acting behind-the-scenes to try and influence banks to cut off capital to these perfectly legal industries. Kerry is working with allies on corporate boards to try and implement their brand of “woke capitalism,” pressuring banks and lending institutions to adopt extreme Environmental Social Governance (ESG) policies and make capital decisions based not on business factors, but their preferred political outcomes.
This is not a rumor, or innuendo – it’s fact. Almost immediately after taking office last January, I started hearing from West Virginia coal companies about their struggles in getting capital to fund operations. I couldn’t believe it. With coal soaring to multi-year highs in price, firms were being told by banks that they didn’t think their operations were a good investment. It wasn’t because of financial factors, it was because their industry wasn’t what the administration wanted banks to invest in.
This is not right. It’s not American. It’s not how the free markets are supposed to work. And it must not be allowed to continue. That is why I’ve been leading a movement of state treasurers, financial officers and other government leaders to stand up to this pressure on our coal, oil and natural gas industries.
Last May, I formed a coalition of 15 state treasurers and financial officers to tell the Biden administration and John Kerry to back off and let the free markets remain free. We’re not asking for these industries to receive special treatment, we just want them to be treated the same as everyone else. To date, I’ve heard nothing from either the administration or Kerry himself in response – nor have the policies and rhetoric they’ve handed down since indicated a willingness to change.
That’s why in November, we stood up to take further action and send a signal to the financial industry as a whole that we meant what we said. As a collective of states, our coalition announced in an open letter to the United States banking industry that we would now take concrete steps to reform our states’ banking contract processes to ensure there’s a level playing field for our critical industries.
While a state like West Virginia may seem small to the multi-trillion financial services industry, as a collective of states, we now represent more than $700 billion in assets under management – a significant amount of business for U.S. banks. Simply put: We want to do business with firms that want to do business with our people. If a bank or financial institution says it doesn’t want to lend to a significant portion of our states’ economies, then we think we should take that into account as we’re deciding whom we should do business with on behalf of our citizens.
The steps we’re taking vary by state, and include actions ranging from enhanced due diligence to requiring banks to certify they are not engaged in boycotts of the fossil fuel industry in order to be awarded a state banking contract. In West Virginia, my office drafted and the Legislature passed Senate Bill 262, which puts into law our process of how we will now review every bank that bids on one of our contracts to determine if they’re engaged in a fossil fuel boycott.
As Treasurer, my office must review and approve nearly every banking contract between a financial institution and our government. Under this law, when a bank or financial institution seeks to do business with our state, my staff and I will review the company’s publicly available information, including statements by company officials, corporate ESG policy statements published online and documents filed with the Securities and Exchange Commission (SEC) or other government agencies, along with information published or provided by nonprofit organizations, research firms, international organizations and other state or federal governmental entities.
All of these documents will be used to assess whether the company is engaged in an unfair boycott against the fossil fuel industries. If we determine they are, they will be ineligible to do business with my office and we’ll publish their name on a restricted financial institutions list identifying them as having engaged in a boycott of our coal, oil and natural gas sectors.
If a company objects to this listing, they can file a notice with our office to appeal the designation, and provide additional information demonstrating how they are not engaged in a fossil fuel boycott. Should a company demonstrate to our satisfaction that they are not engaged in such a boycott, we can remove them from the list.
Texas has passed similar legislation, and we’re working with our counterparts in other states to introduce it there as well. While it has drawn the ire of some of the more outspoken corporate activists in the financial services industry, I’ve found there are a great number of banking executives who support it.
The anti-fossil fuel push in the banking industry is being driven mainly by activist board members and select executives who favor the politicians who are pushing these policies. Many executives have been unable to push back against this pressure. However, now that our coalition of states is speaking out and taking action, the tide is turning. Many corporate leaders can now push back on the policy proposals by showing corporate leaders that these potential boycott and anti-fossil fuel ESG policies can come with a cost.
As we take action, our coalition grows. I’ve been hearing from counterparts in additional states who have interest in implementing our legislation in their state. It is my hope that, as the collective dollar amount of our coalition grows, Wall Street will take notice. Corporate leaders will see they’ve gone too far bending to the whims of the woke mob.
Larry Fink of BlackRock has already backtracked somewhat on his anti-fossil fuel stance. Facing a potential loss of banking business in Texas, his people have privately told leaders there that his company is not as anti-fossil fuel as their past rhetoric has indicated. Additionally, a senior executive of U.S. Bank has told us he too supports the effort, being quoted as saying, “Personally, I totally agree with the [treasurers’] letter.”
This clearly demonstrates our collective state action is working, and the importance of keeping our leaders’ feet to the fire on this issue. Because our fossil fuel industries are needed now more than ever.
With inflation already stirred up following the pandemic, and now with commodities markets surging following the invasion of Ukraine, it’s more important than ever to invest in and secure additional supplies from our coal, oil and natural gas industries.
We need to tap into our domestic sources of reliable, abundant, affordable energy, and we need to get it to market as soon as possible. To do that, we need to make sure these companies have the access to capital in order to expand and grow their operations. And government must get off the backs of these industries to allow them to operate.
If expansion and investment in fossil fuels continues to be stifled, America will see an economic calamity unseen in the modern era. Prices will rise, economic growth will tumble and the people will suffer. America must return to energy independence, and it must do so as quickly as possible. As a coalition of states, we are doing everything in our power to reduce the roadblocks preventing our coal, oil and natural gas companies from producing as much as the market will demand.
The future of our country is on the line. The American people are on our side, and corporate executives are starting to take note of our efforts. I’m confident we’ll succeed and help unleash the potential our abundant fossil fuel resources can provide.
Riley Moore is West Virginia’s 25th State Treasurer and was elected in 2020.