Resource-rich states oppose fossil fuel companies ending up outcasts

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A coalition of state financiers, many from resource-rich states and all Republicans, oppose climate change banks that have adopted corporate policies cutting funding to coal industries , oil and natural gas.

“These industries – which are engaged in perfectly legal activities – provide jobs, paychecks and benefits to thousands of hard-working families in our states and we will not stand idly by and afford to our peoples livelihood be destroyed to advance a radical social agenda, ”said West Virginia State Treasurer Riley Moore. “I am not going to let awake capitalism destroy the jobs and economy of West Virginia.”

Capital spending by U.S. exploration and production (E&P) companies is expected to grow 23.5 percent annually in 2022.

Under the auspices of the United Nations, the Net-Zero Global Banking Alliance is made up of banks that pledge “to align their lending and investment portfolios with net zero emissions by 2050,” according to the website. the alliance. As of December 21, US alliance member banks included Amalgamated Bank, Bank of America, Citi, JP Morgan Chase & Co., Morgan Stanley, The Goldman Sachs Group Inc. and Wells Fargo & Co.

According to a 2021 report by the Rainforest Action Network, Sierra Club, Oil Change International and other activist groups, the above banks – with the exception of Amalgamated and Goldman Sachs – have together provided nearly $ 1.1 trillion in oil, gas, and coal funding since 2016.

Moore led the formation of a coalition of state financial agents in 15 states who have pledged to “scrutinize or potentially curtail future business” with banks that have policies against funding the coal, mining, and mining sectors. oil and gas. Moore told NGI that such boycotts amounted to a presumption of guilt for industries.

“Here is the crux of the matter: How do I take taxpayer money generated by the coal and gas industries and then give” that money to the banks that oppose these industries important to the state, Moore said. .

In an open letter to the US banking industry, state treasurers, auditors and controllers pledged to “take concrete steps within our respective authority to select financial institutions that support a free market and are not engaged in harmful boycotts of the fossil fuel industry for our state financial services contracts.

Coalition members said they represented more than $ 600 billion in public assets under management. Alabama, Arizona, Arkansas, Idaho, Kentucky, Louisiana, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Texas, Utah and Wyoming join West Virginia in the multi-state effort.

“The corporate agendas that attack our oil and gas industry, which has been so vital to our state, must be called upon… I will stand alongside other financial agents to fight against these job-destroying policies that are hurting our state. economy, ”Louisiana Treasurer John Shroder said.

Moore told NGI that his peers in another resource-rich state, Alaska, have expressed interest in the coalition.

“It looks like they will join them as well,” he said. With additional statements, “I think it’s going to grow and I think we’re going to have more leverage. “

A game level zone

Coalition members said they “just wanted financial institutions to rate fossil fuel companies like other legal companies – without prejudice or preference.”

Moore told NGI that states “basically outsource all of our financial services and have all of our assets parked” in banks. Although contractual frameworks vary from state to state, Moore said that in West Virginia, the state can generally withdraw from contracts on 30 days’ notice.

“We’re changing our contracting process” in West Virginia, Moore said. The banks “are going to have to be able to certify that they will not boycott the fossil fuel industry. To be clear, what we are doing here are our preferences in the market. I am not a market regulator. I am a market participant… and these are the preferences of West Virginia in the market.

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Utah State Auditor John Dougall said banks and investors should focus on how companies can potentially “deliver increased shareholder value, rather than fostering certain partisan programs, by particularly to the detriment of shareholders. Energy companies of all types should have unrestricted access to capital and loan markets. “

Arizona Treasurer Kimberly Yee said, “It is important to carefully review the financial institutions with which Arizona does business, especially those that engage in politically motivated attacks on legitimate businesses, which are essential to the economy and to the energy independence of our country “.

The 15-state coalition released its letter to the banking industry in November. Moore told NGI last week that his office has since received comments from the banks. Some banks have said “they are not going to get involved in what I see as a boycott / denial of access to capital for the fossil fuel industry,” Moore said.

He added that banks choosing not to make outcasts of oil, gas and coal companies could also decide to compete for large state banking contracts.

“These are good contracts,” Moore said, explaining that they are low risk and “look great on a balance sheet.”

Moore said he hopes coalition efforts will eventually motivate banks to “come to their senses and … want to act like a bank … and get involved in financing.” If they want to get involved in politics, they will discover that it is a full-contact sport.

Earlier this year, Riley and other state finance officials sent a letter to John Kerry, the US State Department’s special climate envoy, expressing “deep concern” amid reports that he and other officials in the Biden administration “privately lobbied the banks and refused to lend or invest in coal, oil and natural gas companies.”

Samantha Galvez, press secretary to Pennsylvania GOP Treasurer Stacy Garrity, told NGI that Garrity “strongly opposes the Biden administration’s efforts to pressure financial institutions to disengage from corporations coal, petroleum and natural gas “.

On December 6, Garrity sent a letter to financial institutions doing business with the Pennsylvania Treasury Department advising them that her department “has a compelling interest” in whether the institutions she works with are “engaged in energy policies that are harmful to the public. the state economy and, therefore, its people.

Citing figures from the US Energy Information Administration, Garrity noted that Pennsylvania is the second largest producer of natural gas in the United States, its third largest producer of coal, its second largest exporter of coal and the third largest net supplier of energy to the United States. other states.

As a result, Garrity wrote that his department will “carefully assess its relationships” with the financial institutions it does business with. She said an example of such an assessment would be asking institutions to complete “due diligence questionnaires” to determine whether they “are engaged in policies that would be detrimental to the reliable energy companies that are so important to residents. of Pennsylvania “.

For their part, officials of US oil and gas groups have stressed that the sector is making efforts to reduce its emissions. E&P companies and intermediaries are also increasingly seeking environmental certification for natural gas.


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