The state of Kentucky is warning a number of financial institutions, including BlackRock and JPMorgan Chase, to stop boycotting energy companies or the state could freeze its funds in the coming months.
Kentucky’s state legislature passed legislation in 2022 requiring the state treasury to publish an annual list of financial firms found to be engaging in boycotts of energy companies. Under the law, government agencies have 30 days to notify the treasury office if they have any direct or indirect ownership of listed firms and must inform those firms. A listed financial institution has 90 days after receiving notice of boycott or disinvestment.
“When companies boycott fossil fuels, they are intentionally choking the capital lifeblood of Kentucky’s signature industries,” Kentucky Treasurer Allison Ball said in a statement. “Conventional energy sources fuel our Kentucky economy, provide much-needed jobs and heat our homes. Kentucky must not allow our signature industries to be irreparably damaged based on the ideological whims of a select few.”
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Fossil fuel production and use is vital to a nation’s economy. Ball’s office noted that there are 143,994 energy sector jobs in Kentucky, about 7.8% of the state’s workforce.
Kentucky has the third most operating coal mines in the nation, trailing only West Virginia and Pennsylvania, making the Bluegrass State the seventh largest coal producing state in 2021. Kentucky mines produced more than 26 million tons of coal. Energy Information Administration (EIA).
Kentuckians are also fossil fuel customers. About 71% of the electricity consumed by Kentuckians in 2021 was coal-fired, the fourth largest share in the nation, and energy prices were the second lowest of any state east of the Mississippi River, according to the EIA.
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BlackRock and JPMorgan respond
BlackRock and JPMorgan Chase are two of the largest financial institutions in the United States and were among the 11 companies subject to the Kentucky warning.
BlackRock is the world’s largest asset manager with approximately $8 trillion under management, while JPMorgan Chase is America’s largest bank with more than $3 trillion in assets. Both firms disputed Kentucky’s claims that they were boycotting energy companies.
JPMorgan Chase spokeswoman Patricia Wexler told FOX Business: “The fact is, we are among the largest financiers of the U.S. conventional and renewable energy industry, including Kentucky, where we serve some of its largest energy companies and utilities. We believe that , business practices are consistent with Kentucky law, and we hope that this will be reconsidered upon further consideration of the facts.”
A BlackRock spokesperson told Fox Business: “BlackRock’s sole agenda is to deliver the best financial results for our clients. 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 an investor in all energy sector”.
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Efforts by investment banks to push environmental, social and governance (ESG) standards, often at the expense of fossil fuel companies, to encourage investment in green energy businesses have worried lawmakers in states that are major producers of coal, oil and natural gas.
These economic considerations and concerns that ESG investment strategies may reduce investor returns have led a number of states to divest public assets from financial firms that advocate such policies.
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