iThe West Virginia State Treasurer, Wiley Moore--a Republican--recently threatened six major financial institutions with a boycott on doing business with West Virginia government entities. This move by the West Virginia state government implements a state law passed earlier this year that enables "the [West Virginia] Treasurer's Office to create a 'Restricted Financial Institution List' consisting of financial institutions that have publicly stated they will refuse, terminate, or limit doing business with coal, oil, or natural gas companies without a reasonable business purpose." Notably, this law would then preclude these financial institutions from being "eligib[le] for contracts for state banking services."
Both the West Virginia law and this subsequent enforcement activity have been explicitly described as "push back against unfair discrimination against our coal, oil and natural gas industries by the financial sector as part of the so-called 'environmental, social and governance' or 'ESG' investing movement." This move by West Virginia is similar to those embarked on by similar states (e.g, energy-focused states dominated by the Republican Party, such as Texas), which have also sought to combat the recent trend of companies taking ESG principles into account when investing.
This move by West Virginia reflects a recent trend by state and local government to compel companies to "take sides" on hot-button social issues. (The recent imbroglio over DisneyWorld's tax status in Florida is perhaps the preeminent example.) Unless and until there is a clear federal policy on this issue, national corporations will encounter an increasingly tricky set of circumstances as they attempt to navigate the competing demands of various constituencies, and the different jurisdictions in which they operate.
State Treasurer Riley Moore today announced he has sent notices to six financial institutions informing them they could be placed on the state’s Restricted Financial Institution List after his Office made an initial determination that the institutions appear to be engaged in boycotts of fossil fuel companies.
