Money giants tell the treasurer they are not boycotting fossil fuel companies

Objection to major financial firms that have been notified by the West Virginia Treasurer.

The state treasurer’s office last month sent letters to six of the largest US investment firms, warning that they may be ineligible for some West Virginia contracts, alleging they are participating in “boycotts” of fossil fuel companies that remain key aspects of the state’s economy.

The warnings came after the Senate this year passed Bill 262, which directs the treasurer to maintain a list of financial institutions that shy away from investments in fossil fuel companies.

BlackRock Inc, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo all responded by saying that they are not participating in a boycott of fossil fuel companies. Instead, they claim to provide guidance to investors based on an assessment of risk.

MetroNews obtained the responses through a Freedom of Information Act request to the state treasurer. Sixth US Bancorp has until Wednesday to respond and has not yet done so.

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

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

“There are many examples across the country where this type of state intervention ends up poorly, including the imposition of unnecessary costs and additional expenditures from taxpayers’ money.”

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

“Complicating Wells Fargo’s response is the fact that the Office of the Treasurer did not share the criteria it applied to determine inclusion in the List of Restricted Financial Institutions compared to other companies,” company representatives wrote.

Wells Fargo went on to wonder if he was made selectively on the list. Wells Fargo asserted that without evaluating all banks, the basis of the Treasurer’s office may be “at best, unclear and arbitrary”.

Wells Fargo anticipates that the goal of the Treasurer’s Office is to be comprehensive, fair and objective in defining the criteria that will lead to a financial institution’s inclusion in the List of Restricted Financial Institutions. Wells Fargo wrote that the office’s procedures for compiling that list thus far appear inconsistent with this intent.

It should be noted that many large national and international banks have similar policies or positions as Wells Fargo. However, it appears that many have not received the Treasurer’s notice, and therefore will not be assessed for their placement on the list.”

West Virginia’s new law defines a “boycott” as the refusal to do business with a company without a “reasonable business purpose”—particularly when the company seeking financing does business in the fossil fuel markets or does business with other fossil fuel companies.

Then a reasonable business purpose is defined as promoting the financial success or financial stability of a financial institution, mitigating risks to a financial institution, complying with legal or regulatory requirements or limiting the liability of the financial institution.

The law indicates that the treasurer may rely on information such as a financial institution’s certification that it is not participating in a boycott of energy companies, publicly available data, information provided by the financial institution or its senior representatives, or information published by a state or government entity.

The potential penalty for corporations is ineligible for banking contracts with the state. Treasury offices manage approximately $18 billion in state government receipts on an annual basis.

“Earlier this year, our office proposed, and the Legislature approved, Senate Bill 262 to combat unfair discrimination against the coal, oil, and natural gas industries by the financial sector as part of so-called ‘Environmental, Social and Governance’ or State Treasurer Riley stated. Moore, when letters of warning were first issued, of the “ESG” investment movement.

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

Each of the responding financial firms has so far denied boycotting the fossil fuel companies. Then each referred to the “reasonable business purpose” aspect of state law to prescribe guidance to investors based on assessments of trends and risks.

Representatives of that company wrote: “Let’s state categorically at the outset that Morgan Stanley is not boycotting energy companies.” In fact, Morgan Stanley currently has more than a dozen fossil fuel customers with a real presence in West Virginia.

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

Morgan Stanley said it has designed risk-based approaches to energy sectors based on fossil fuels. Like the others, Morgan Stanley says these methods are for “reasonable business purposes.”

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