West Virginia is standing up against big Wall Street banks that are boycotting fossil fuel.
West Virginia treasurer Riley Moore decided that BlackRock (the world’s largest asset manager), Wells Fargo, JP Morgan Chase, Morgan Stanley and Goldman Sachs are no longer eligible for any West Virginia’s banking contracts due to the banks’ decisions to boycott fossil fuels, Reuters reported.
This West Virginia ban will cost the Wall Street banks $18 billion per year, according to Moore’s office, the Washington Free Beacon reported.
A representative for Well Fargo and Morgan Stanley said that the banks disagreed with the state’s decision.
A representative for JP Morgan called it “disconnected from the facts.” A BlackRock representative also said that the firm disagreed with the decision.
“BlackRock does not boycott energy companies, and we do not pursue divestment from sectors and industries as a policy,” the representative said, Reuters reported.
But West Virginia’s decision to part ways with these big banks makes sense since the state is dependent on coal — a fossil fuel.
Most of the state relies on coal for its electricity.
“In terms of consumption, West Virginia generates electricity almost entirely from coal-powered plants, with eight of the state’s ten largest power plants being coal-fired. As of 2020, 89 pecent of electricity in the state is generated by coal compared to 19% nationwide,” according to DSire Insight, which is a “database of state incentives for renewables & efficiency.”
Do you think that there should be more investing into green initiatives?
Yes: 3% (4 Votes)
No: 97% (118 Votes)
Besides having its electricity grid relying on coal consumption, the coal industry in West Virginia employs thousands.
In 2018 coal-mining jobs in the state totaled 13,962, according to Statista.
In 2020, two out of ten leading underground coal mines by production are in West Virginia.
Overall, the entire Appalachian region is very reliant on coal mining for employment and consumption.
In 2020, there were nearly 34,000 coal mining jobs throughout Appalachia.
Despite how reliant the region is on coal, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo all publicly said they were reducing financing for new coal projects, the New York Times reported.
Meanwhile, BlackRock has been reducing its actively managed holdings in coal companies for the past two years.
“Such moves are increasingly common on Wall Street as big financial firms move to reduce their financial exposure to industries like coal, which is a major contributor of planet-warming emissions, and has become less profitable in recent years,” the New York Times reported.
However, no matter how virtuous it may seem to try to cut back on financing things that will produce carbon emissions, it carries serious consequences for economies like West Virginia’s.
It only makes sense that West Virginia would want to cut ties with banks that seem to be shifting away from investing in its main market.
“We’re handing money over to a financial institution that is generated from the fossil fuel industry,” Moore said, according to the Times. “At the same time, they’re trying to diminish those funds. There’s a clear conflict of interest there.”
It is certainly a clear conflict of interest. And the loss of West Virginia banking contracts is going to hurt these Wall Street players significantly.
It just goes to show that hopping on the trend of investing in green initiatives is not always a win-win. It affects major economies and there is still plenty of money to be lost by rejecting fossil fuels.
