JPMorgan Chase, BlackRock and Citigroup were among a list of financial companies informed that they face potential divestment by Kentucky state government entities unless they stop “boycotting energy companies,” according to a statement released Tuesday by Kentucky State Treasurer Allison Ball.
The initiative marks the latest move in an anti-ESG push by politicians in several Republican-leaning states, which recently saw 19 Attorneys General – including Kentucky AG Daniel Cameron – sign a letter accusing BlackRock of acting with “mixed motives” in its pursuit of an anti-fossil fuel and pro-net zero agenda, and Texas place several asset managers on a list for potential divestment for allegedly boycotting energy companies.
In the statement, listed under the “Fight Against ESG” section of the Treasury website, Ball warned that the state’s industries are at risk of being “irreparably damaged based upon the ideological whims of a select few.”
“When companies boycott fossil fuels, they intentionally choke off the lifeblood of capital to Kentucky’s signature industries. Traditional energy sources fuel our Kentucky economy, provide much needed jobs, and warm our homes.”
The announcement follows the passage of a bill in the Kentucky General Assembly last year requiring the annual publication of a list of financial companies engaged in energy company boycotts, defined as “refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with a company,” based on the company’s engagement with fossil fuel exploration, production, utilization, transport and sale, and its failure to commit to environmental targets beyond those required by law.
The bill also alleged that banks are denying financing to fossil fuel companies in order to decarbonize their portfolios, institutional investors are pressuring fossil energy companies to reduce GHG emissions to zero by 2050, and investment firms are “colluding to force fossil energy companies to cannibalize their existing businesses.”
According to the bill, following the publication of the list, state governmental entities are required to notify the Treasurer if they own direct or indirect holdings in the listed companies and send notices to the financial institutions, following which the institutions “must cease engaging in energy company boycotts in order to avoid becoming subject to divestment.”
Many of the listed institutions are major financiers of and investors in both fossil-based and renewable energy companies. JPMorgan, for example, provides financing for traditional energy companies including American Electric Power, Duke Energy, and Tennessee Valley Authority. In a statement provided by JPMorgan following the release of the list, the firm said:
“The fact is that we are among the largest financiers of the U.S. traditional and renewable energy industries, including in Kentucky where we serve some of its largest energy companies and utilities. We believe our business practices are in line with Kentucky law, and we are hopeful a deeper look at these facts would lead to reconsideration.”
In a statement provided by BlackRock to ESG Today, the firm noted that it has “invested approximately $276 billion in energy companies globally” on behalf of clients.
“BlackRock does not boycott energy companies and will continue to be investors across the energy sector.”
The full list of financial institutions subject to potential divestment due to “boycotting” energy companies includes BlackRock, BNP Paribas, Citigroup, Climate First Bank, Dankse Bank, HSBC, JPMorgan Chase, Nordea Bank, Schroders, Svenska Handelsbanken, and Swedbank.