Republican state puts banks on notice over wokeness: 'Won’t be tolerated'

FIRST ON FOX: Kentucky issued an official notice Monday morning listing 11 banks it accused of boycotting energy companies and which would be subject to divestment within months.

Kentucky State Treasurer Allison Ball announced that, after a review of their energy and climate policies, the listed banks — which included BlackRock, the largest asset manager in the world, JPMorgan Chase, Citigroup and HSBC among others — were found to be in an active boycott of fossil fuel companies. The Kentucky state government could begin divesting from the firms if they didn't reverse their boycotts, according to the notice obtained first by FOX Business.

"Kentucky is a coal, oil, and gas producing state," Ball told FOX Business. "Our energy sector helps power America. Kentucky refuses to fund the ideological boycotts of our own fossil fuel industry with the hard-earned taxes and pensions of Kentucky citizens."

Kentucky's Republican-led legislature passed a bill requiring the state government to identify and divest from banks that are determined to be engaging in a boycott of energy and fossil fuel companies. Democratic Gov. Andy Beshear signed the bill, which was endorsed by both the Kentucky Oil and Gas Association and Kentucky Coal Association, into law on April 8, 2022.

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The law directs the state treasurer's office to publish an annual list of financial firms engaged in energy boycotts. State agencies then must notify the office if they own direct or indirect holdings of the listed companies and send a notice to the relevant companies within 30 days. If the companies don't halt their boycotts within 90 days of receiving such notice, the state government could divest from their holdings.

"When companies boycott fossil fuels, they intentionally choke off the lifeblood of capital to Kentucky’s signature industries," Ball said in a statement Monday. "Traditional energy sources fuel our Kentucky economy, provide much needed jobs, and warm our homes. Kentucky must not allow our signature industries to be irreparably damaged based upon the ideological whims of a select few."

Dozens of banks and major financial institutions which manage trillions of dollars in assets worldwide have made aggressive commitments to withdraw investment from fossil fuel companies and divert those resources to boost green energy companies as part of the so-called environmental, social and governance (ESG) movement. The companies are in favor of a rapid transition to renewable energy sources to stave off climate change.

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Over the last year, though, Republican lawmakers and officials in nearly 20 states have organized a concerted effort to push back against the ESG movement, arguing that the oil, gas and coal sectors are vital for employment and energy production. They have threatened various forms of financial retribution in response to major banks' ESG and climate policies.

Kentucky is the seventh-largest coal-producing state in the U.S., generates 71% of its electricity from coal-fired plants, is home to one of the largest oil refineries in the nation and has about 2% of the nation's total underground natural gas storage capacity, according to the Energy Information Administration. Overall, the energy sector employs 7.8% of employed Kentuckians.

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In her announcement Monday, Ball also noted that Kentucky had the 12th-lowest average electricity price of any state. The average price represented the second-lowest price for a state east of the Mississippi River.

"Treasurer Ball takes another bold step today in defense of her state’s financial future by putting banks on notice that boycotts of American energy won’t be tolerated," State Financial Officers Foundation CEO Derek Kreifels said in a statement to FOX Business. 

"She and other state financial officers across the country are leading the movement to ensure that money earned by hardworking American families is used in accordance with their values, not weaponized against them," he added.

Arizona, Arkansas, Florida, Louisiana, Missouri, South Carolina, Utah and West Virginia have already announced they will divest hundreds of millions of dollars from banks engaging in energy boycotts. Texas and Oklahoma have taken legislative steps akin to Kentucky's that will likely soon lead to divestment.

"Treasurer Allison Ball continues to show undaunted leadership in standing up for her state’s financial interests," Will Hild, the executive director of Consumers' Research, told FOX Business. "By putting financial institutions on notice today, she makes clear that Kentucky will no longer do business with financial institutions whose ideological agendas have targeted one of the state’s signature industries."

"It is past time for banks and money managers to abandon their war on American energy and hardworking people who literally keep the lights on across the country."

In response to the action Monday, BlackRock and JPMorgan Chase pushed back, saying they haven't engaged in energy boycotts as alleged by Kentucky's state government.

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"BlackRock’s only agenda is delivering the best financial results for our clients," BlackRock said in a statement to FOX Business. "On behalf of our clients, we have invested approximately $276 billion in energy companies globally. BlackRock does not boycott energy companies and will continue to be investors across the energy sector."

Trish Wexler, a spokesperson for JPMorgan Chase, said the company believed it was acting in accordance with Kentucky law.

"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," Wexler told FOX Business. "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."

Citigroup and HSBC declined to comment.