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Illustration: Annelise Capossela/Axios

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.

Go deeper

Fighting global warming means reshaping finance

Illustration: Aïda Amer/Axios

The world's growing efforts to limit climate change will have far-reaching impacts for financial markets, and the groundwork for that push is being laid right now.

Why it matters: As more governments implement climate change regulations, trillions of dollars are going to flow towards clean energy and climate-friendly technologies, affecting significant portions of the global financial industry.

Dion Rabouin, author of Markets
May 25, 2021 - Economy & Business

Fed makes little progress in central bank digital currency race

Federal Reserve governor Lael Brainard. Photo: Taylor Glascock/Bloomberg via Getty Images

Despite much fanfare in recent months, the U.S. looks to have made minimal progress on the development of or consensus around a central bank digital currency (CBDC), despite advances from other central banks, including China's.

Driving the news: Fed governor Lael Brainard, who is leading efforts on a digital currency as the governor in charge of financial stability, delivered a speech on Monday detailing the state of research and development on CBDCs in the U.S. but provided little new information.

Biden calls on Congress to extend eviction moratorium as deadline looms

Photo: Michael M. Santiago/Getty Images

President Biden called on Congress on Thursday to extend the CDC's national eviction moratorium due to the threat of the Delta variant, after the Supreme Court ruled that the administration couldn't extend it past July 31 without specific legislation.

Why it matters: Millions of tenants across the country face the threat of eviction in the coming days. The moratorium was first implemented in September 2020 and extended several times to prevent a wave of evictions caused by pandemic-related economic decline.