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West Virginia State Treasurer Wiley Moore – a Republican – recently threatened six major financial institutions to boycott business dealings with West Virginia government entities. This move by the West Virginia state government implements state law passed earlier this year that allows “the [West Virginia] Office of the Treasurer to create a “Restricted Financial Institutions List” of financial institutions that have publicly stated that they will refuse, terminate, or limit doing business with coal, oil, or natural gas companies without a business purpose within reason. prevent these financial institutions from being “eligible”[le] for government banking service contracts. »
The West Virginia law and subsequent enforcement activity has been explicitly described as “repelling unjust discrimination against our coal, oil and natural gas industries by the financial sector as part of the so-called ‘environmental, and Governance” or “ESG Investment Movement.” This move by West Virginia is similar to those undertaken by similar states (e.g., energy-focused states dominated by the Republican Party, such as the Texas), who have also sought to combat the recent trend of companies considering ESG principles when making investments.
The West Virginia move reflects a recent trend by state and local governments to force companies to “take sides” on burning social issues. (The recent tangle over the tax status of DisneyWorld in Florida is perhaps the preeminent example.) Unless and until there is clear federal policy on this issue, domestic corporations will face a increasingly tricky set of circumstances as they try to navigate the competing demands of various constituencies and the different jurisdictions in which they operate.
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