Treasurers from 15 Republican-run states have threatened to pull billions of dollars from financial institutions which halt investments and lending to fossil fuel companies.
Led by West Virginia – the second largest US coal producer – the states penned a letter to US Climate Envoy John Kerry this week, denouncing recent efforts by the Biden administration to press Wall Street into adopting near-term climate commitments and increasing their allocation for climate-friendly finance.
“We intend to put banks and financial institutions on notice of our position, as we urge them not to give in to pressure from the Biden Administration to refuse to lend to or invest in coal, oil, and natural gas companies.
“As the chief financial officers of our respective states, we entrust banks and financial institutions with billions of our taxpayers’ dollars. It is only logical that we will give significant weight to the fact that an institution engaged in tactics that will harm the people whose money they are handling before entering into or extending any contract,” they said.
Signatories to the letter also included Alabama, Arizona, Arkansas, Idaho, Kentucky, Mississippi, Nebraska, Ohio, Oklahoma, Pennsylvania, Missouri, South Carolina, North Dakota and South Dakota.
In addition to being responsible for state expenditure, most treasurers have broad oversight of public funds, which includes an estimated $3trn of state retirement assets.
The move is the latest in a series of efforts by state Republicans to protect the fossil fuels upon which their economies are dependent. Earlier this month, state lawmakers in Texas passed a law which would compel the state‘s four pension funds to stop investing in firms that boycott fossil fuels. Similar bills are being considered by the North Dakota and Alaska legislatures. (Read RI’s feature on divestment legislation in the US here)
Separately, House Democrats have introduced two pieces of legislation requiring financial advisors and workplace retirement schemes to establish a ‘Sustainable Investment Policy’ which describes how ESG factors are integrated into their products and services.
“Investors should know whether their money supports sustainable projects or causes negative impacts on communities like mine,” said Congressman Jesús García, one of the bill’s sponsors and representative for Chicago’s working class Fourth Congressional District.
“These bills create new tools for investors and retirement plan holders to determine whether their money supports environmental sustainability, workers’ rights, and corporate governance best practices.”
The bills were supported by Fiona Reynolds, CEO of the Principles for Responsible Investment, and environmental campaign group Friends of the Earth.