Finance giants tell treasurer they’re not boycotting fossil fuel companies

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The big financial companies put on notice by the treasurer of the state of West Virginia oppose it.

Last month, the state treasurer’s office sent letters to six of America’s largest investment firms, warning them that they may not be eligible for certain West Virginia contracts, alleging they engaged in “boycotts” of fossil fuel companies that remain major aspects of the state’s economy.

The warnings came after the passage this year of Senate Bill 262, directing the treasurer to maintain a list of financial institutions that avoid investments in fossil fuel companies.

BlackRock Inc., Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo each responded that they do not engage in boycotts of fossil fuel companies. Instead, they argue that they provide advice to investors based on risk assessment.

MetroNews got the answers through a Freedom of Information Act request to the state treasurer. A sixth company, US Bancorp, has until Wednesday to respond and has yet to do so.

JP Morgan’s response objected to West Virginia’s proposed state intervention in financial markets.

“It is unfortunate that West Virginia is cutting itself off from parts of the market and attempting, through government action, to control the decisions made by private companies,” the JP Morgan representatives wrote.

“There are many examples across the country where this type of state intervention ends badly, including imposing unnecessary costs and extra spending of taxpayers’ money.”

Wells Fargo objected that the notice sent last month by the Treasurer’s Office did not provide any specific examples of boycott activity.

“Wells Fargo’s response is complicated by the fact that the Treasurer’s Office has not shared the criteria it applied to determine inclusion on the Restricted Financial Institutions List versus other companies,” they said. writes representatives of the company.

Wells Fargo then asked if he had been placed on the list selectively. Without evaluating all banks, Wells Fargo argued, the base of the treasurer’s office can be “unclear and arbitrary at best.”

“Wells Fargo expects the Office of the Treasurer’s goal to be complete, fair and objective in identifying the criteria that will lead to a financial institution’s inclusion on the Financial Institutions Restricted List. The Bureau’s actions to compile this list so far, however, appear inconsistent with that intent,” Wells Fargo wrote.

“Notably, many large national and international banks have policies or positions similar to Wells Fargo. Yet many appear not to have received advice from the Treasurer and therefore will not be assessed for placement on the list.

West Virginia’s new law defines a “boycott” as refusing to do business with a company without a “reasonable business purpose” – particularly when the company seeking funding does business in fossil fuel markets or makes business with other companies involved in fossil fuels.

A reasonable business objective is then defined as promoting the financial success or stability of a financial institution, mitigating risk for a financial institution, complying with legal or regulatory requirements, or limiting the liability of an institution. financial.

The law indicates that the treasurer can rely on information such as certification from a financial institution that it is not involved in a boycott of energy companies, publicly available statements or information made by the financial institution or its principal representatives or information published by a state or governmental entity. .

The potential restrictions would apply to government banking contracts. Treasurer’s offices manage approximately $18 billion in state revenue on an annual basis.

Riley Moore

“Earlier this year, our Office proposed, and the Legislature passed, Senate Bill 262 to push back against unjust discrimination against our coal, oil and natural gas industries by the financial sector in part of the so-called ‘environmental, social and governance’ or ‘ESG’ investment movement,” State Treasurer Riley Moore said when the warning letters were first sent out. time.

“We have now demonstrated that we are serious about enforcing this law.”

Each of the financial companies that have responded so far have denied boycotting fossil fuel companies. Each then cited the “reasonable business purpose” aspect of state law to describe advice to investors based on trend and risk assessments.

“Let us state categorically at the outset that Morgan Stanley does not boycott energy companies,” wrote representatives of that company. “In fact, Morgan Stanley currently has more than a dozen fossil fuel clients that have a significant presence in West Virginia.”

To underscore this point, Morgan Stanley cited its inclusion on a list of top fossil fuel financiers “Dirty Dozen” from 2016 to 2021 in a recent report titled “Banking on Climate Chaos” by an environmental coalition called the Rainforest Action Network. This list also included some companies warned by the state treasurer, including JP Morgan and Wells Fargo.

Morgan Stanley said it has adapted risk-based approaches to fossil fuel-based energy sectors. And, like others, Morgan Stanley says these approaches are “reasonable business goals.”

“If, after reviewing our response, you have not concluded that we should be removed from the RFI list, we would appreciate the opportunity to come to West Virginia and meet with you to discuss this subject in more detail, including including a review of the fossil fuel sector in West Virginia,” wrote Morgan Stanley.

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