In late July, West Virginia State Treasurer Riley Moore announced that BlackRock, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo were no longer eligible to receive state banking contracts because they “engaged in boycotts of fossil fuel companies” through their ESG policies. The measure does not ban the banks from operating in West Virginia.

Why should we care?
In the wake of this partial ban, the affected banks have distanced themselves from their ESG policies, which West Virginia State Treasurer Moore derided as “politically popular in California or New York” but harmful in his home state, which is home to a sizeable fossil fuel sector. In a departure from its message that “sustainability is growth investing,” Goldman told Treasurer Moore that it had financed $17.8B in oil and gas projects last year as proof that it did not “discriminate” against the fossil fuel industry. Fintechs may face a similar dilemma—forsaking either their values or their profit—to remain in pro-fossil fuel states’ good graces, but it depends on how aggressively these states broaden the scope of their punitive measures. The five blacklisted banks conduct business with the West Virginia state government, which offered an Achilles heel for state politicians to exploit. Whether the state deploys this same leverage through commercial or retail banking remains to be seen, but it suggests the showdown between the financial sector and state governments is far from over.