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Kentucky Joins Growing Movement To Blacklist ESG Banks

Posted by JJ The Psychotherapist on January 7, 2023 at 5:55 PM

Kentucky Joins Growing Movement To Blacklist ESG Banks

 


In March, Kentucky passed a law requiring the state's treasurer, Allison Ball, to release a list of banks that boycott the energy industry. Yesterday, Ball released a list of banks including BlackRock, Citibank, JPMorgan Chase, BNP Paribas, HSBC, and six other smaller banks. Kentucky has a large stake in the energy industry, with 7.8% of the state's labor force coming from the sector and 71% of the state's electricity coming from coal-fired plants. The state is also responsible for 1.6% of America's oil refining capacity and 2% of its natural gas storage. More than half of Kentucky's households rely on electricity for heating.


According to the Kentucky law, known as SB205, the banks on the boycott list have 60 days to contest the charges and 90 days to "cease engaging in energy company boycotts in order to avoid becoming subject to divestment by state governmental entities." Derek Kreifels, CEO of the State Financial Officers Foundation, stated that he expects more states to follow in the footsteps of Kentucky, Texas, and West Virginia in 2023. These states are protecting their fossil fuel industries from boycotts by environmental, social, and governance (ESG) groups, which have targeted these industries in recent years.


Many of the financial institutions on Kentucky's boycott list have signed pledges to reduce carbon emissions as members of international groups such as Climate Action 100+, the Glasgow Financial Alliance for Net Zero, the Net Zero Banking Alliance, and the Net Zero Asset Managers initiative. While these firms claim that they remain active investors in fossil fuel companies and do not discriminate against them, investment firm Vanguard has withdrawn its membership from these clubs.


At a December hearing before the Texas state senate, representatives from State Street and BlackRock testified that they had signed net zero pledges but had not acted on them. Ball stated that it is "remarkable" that these institutions claim not to be engaging in boycotts when they have statements saying otherwise. She added that BlackRock has been explicit in wanting to cease business with coal companies.


The actions by Kentucky and other conservative states come as the Biden administration has pledged to transition the country to clean energy and has already revoked permits for the Keystone XL oil pipeline. The decision to boycott banks that boycott the energy industry is seen as a way to protect these industries and the jobs they provide.

Categories: Politics, Culture, Finance

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