Kentucky officials Tuesday threatened to sell the state from 11 financial institutions over what they perceived as climate-friendly investment practices. Targeted companies include BlackRock, JPMorgan Chase, and Citigroup, all of which have publicly committed to incorporating environmental principles into their financial strategies.
Such policies “boycott fossil fuels” and “deliberately cut off the capital lifeline to Kentucky’s distinctive industry,” Kentucky Treasurer Allison Ball said in a press release. . The announcement follows state legislation passed last year directing her office to publish an annual list of financial institutions involved in so-called “energy boycotts.”
Kentucky’s effort is the latest in a larger Republican campaign against what are known as environmental, social, governance, or ESG investing principles. After years of activist efforts to push financial institutions to disclose and account for climate change risks, his ESG practices, which theoretically prioritize investing in renewable energy over oil and gas, have gone from the sidelines to the mainstream. rice field. An acronym for the topic of Wall Street. In March, the Securities and Exchange Commission (SEC), a federal agency meant to protect U.S. investors, introduced a new law requiring companies to disclose the risks posed to their businesses by carbon emissions and climate change. 90% of all companies currently have or are in the process of developing an ESG strategy, according to mutual fund research firm Morningstar.
But over the past year, Republicans have opposed what Florida Governor Ron DeSantis called “awakened capitalism.” As of August last year, 17 states have proposed or adopted laws restricting dealings with institutions that consider environmental and social criteria in their investment practices. West Virginia and Texas made a list similar to Kentucky’s last year, while Florida, Louisiana and Missouri withdrew a total of $3 billion from BlackRock. His CEO of BlackRock is one of the most outspoken financial leaders on the value of ESG investing.
Now, Republicans are using their control of the U.S. House of Representatives as a new tool in the fight against ESG, saying ESG can undermine the interests of the fossil fuel industry and stakeholders. North Carolina Republican Rep. Patrick McHenry, the new chairman of the House Committee on Financial Services, called the SEC’s climate risk disclosure rule a “far-left social agenda,” calling for close regulatory scrutiny. I promised. Other House Republicans call asset managers to testify at investment hearings. At the state level, the Republican state attorney general has motioned that he is prepared to take SEC policy to court once the rule is finalized, according to Inside Climate News.
But given the state of climate-friendly investing on Wall Street, Republicans’ concerns look like a hoot. Adhering to his ESG principles, which consider climate change impacts, supply chain social impacts, etc., the asset manager has begun to expand a subset of its funds, but most of its funding is focused on carbon emissions. Remains in the fund not considered. According to a recent report, both JP Morgan and Citigroup are members of the United Nations Net Zero Banking Alliance, making him one of the fossil fuel industry’s top financial institutions in 2021. (Vanguard, the largest asset manager after BlackRock, pulled out of the alliance last month after a backlash from the Republican Attorney General.) What constitutes ESG investing also remains vague and undefined, with Green It can lead to washing. For example, some financial companies’ energy transition funds can invest in fossil fuel companies. Last year was the first year in history when more money was raised in the bond market for greener projects than fossil fuel companies, but Big Oil is still seeing more money coming from private equity as gas prices rise. and banks and asset managers appear to remain committed. Industry funding.
Following Kentucky’s announcement, the 11 financial firms added to the state’s restricted list have 30 days to notify the Treasury Department of their holdings in energy companies and 90 days to “stop participating” in the boycott. is needed. If they don’t comply, the Kentucky government will withdraw funds from the agency. So far, some publicly traded companies have justified fossil fuels. In a statement to The Hill, a JPMorgan Chase & Co. spokesperson said, “We are one of the largest investors in the traditional and renewable energy industry in the United States, including Kentucky. We serve the largest energy companies and utilities in the world.” BlackRock told Reuters it has invested in energy companies such as ExxonMobil and Occidental Petroleum.
