Treasurer warns against divesting in fossil fuels
Pennsylvania Treasurer Stacy Garrity joined 14 other state treasurers this week in calling on the Biden administration to stop encouraging banks to cut off capital to oil, gas and coal companies.
At the same time, the treasurers warned banks that they may withdraw billions of dollars they control from financial institutions that will not lend money to fossil fuel companies.
The Biden administration is taking a holistic approach to combatting climate change, including building climate considerations into economic policies and pushing lenders to use financing as a tool to shift the world away from climatewarming fuels.
In a Tuesday retort led by West Virginia Treasurer Riley Moore, the trustees of hundreds of billions of dollars of state funds wrote that the coal, oil and natural gas industries “are vital to our nation’s economy” and efforts to discourage banks from lending to them amounted to picking economic losers. The letter — also signed by the treasurers of Ohio, Oklahoma, Kentucky and other states — was sent to John Kerry, the president’s special envoy for climate.
“It is simply antithetical to our nation’s position as a democracy and a capitalist economy for the executive branch to bully corporations into curtailing legal activities,” they wrote.
Many of the country’s largest banks have already pledged to reach net-zero carbon dioxide emissions across their portfolios by the year 2050. The commitments are in line with the Paris climate agreement and what scientists say will be necessary to avoid climate change on a devastating scale.
While the treasurers slammed the Biden administration for pressuring banks, they applied their own pressure on financial institutions, writing that they intend to put banks “on notice” that they will “give significant weight” to how banks treat fossil fuel companies “before entering into or extending any contract” with them.
The Pennsylvania treasurer oversees $110 billion in state assets. Ms. Garrity, a Republican, took office in January.
In a statement, Ms. Garrity said fossil fuel companies “rely on and deserve access to capital from financial institutions, just like any other lawabiding American company.”
Treasury press secretary Samantha Galvez said there are no plans to contact any specific financial institutions beyond posting the letter and a press release.
If a bank refuses to lend money to fossil fuel companies, it “will be one of many factors considered in future negotiations,” she said. “Entering into a contract, or extending a contract, with any bank or financial institution is always a negotiation and involves a comprehensive look at the company being considered.”