Scoop: States warn banks — Drop coal, and we drop you
More than a dozen Republican state treasurers are threatening to pull assets from large financial institutions if they agree to decarbonize their lending and investment portfolios, Axios has learned.
Why it matters: The Biden administration — led by special presidential climate envoy John Kerry — has leaned on the banks to help reduce U.S. carbon emissions. That's prompted GOP lawmakers to criticize efforts to "de-bank" fossil fuel firms. The treasurers collectively control hundreds of billions worth of assets.
- Fifteen of them, led by coal-heavy West Virginia, say they're prepared to use this financial muscle to push back.
- The effort includes treasurers from other states with large energy industry presences such as North Dakota, Kentucky, Pennsylvania and Oklahoma.
What's happening: The state officials sent a letter on Tuesday to Kerry, who's leading the administration's efforts to enlist banks in its climate policy fight.
- "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," the officials wrote.
- In an interview with Axios, West Virginia state Treasurer Riley Moore said he was prepared to terminate contracts with banks that pull back their fossil fuel industry lending in response to administration pressure.
- "Frankly, it is not fair for the people of West Virginia to allow a bank to handle our money when they're diametrically opposed to our way of life," Moore said.
What they're saying: Moore called the issue "a matter of life and death for my people."
- He said coal and gas operators in his state have reported difficulties obtaining financing from banks blaming pressure from the Biden administration to try to "green" their portfolios.
- "If you just cut these guys off at the knees — gas and coal in a state like West Virginia — and they can no longer conduct their business ... it is going to destroy us," Moore said. He cited the industries' heavy jobs footprint and contributions to the state's tax base.
- "At no point has Secretary Kerry pressured financial institutions into making commitments," a State Department spokesperson said in an emailed statement. "On the contrary, many financial institutions have reached out to Secretary Kerry to initiate conversations regarding the financial risks and potential opportunities related to climate change."
Between the lines: The state officials signing the letter collectively manage more than $600 billion in assets in state treasuries, pension funds and other government accounts, according to publicly available financials and information provided by the state treasurer offices.
- Those states work with large financial institutions to invest and grow those funds, to support state spending and retirement payments to former workers.
- Even for sizable investment banks, such funds can be some of their largest accounts.
Editor's note: This story has been updated with comments from the State Department.