The GOP’s New War On Divestment
(AP Photo/Martin Meissner)
Republicans are trying a bold new tack to stall the fossil fuel boycott and divestment movement — all the while oil and gas companies flood their campaign coffers.
by Donald Shaw
Republican state and federal lawmakers, their campaign coffers filled with fossil fuel donations, are quietly building a nationwide effort to pass anti-divestment bills that would punish financial institutions that consider the climate crisis in their business deals or try to do something about it by not working with fossil fuel companies.
The effort began last December, when a model bill written by former Texas state Rep. Jason Isaac (R), now director at the Charles Koch-funded think tank Texas Public Policy Foundation, was unveiled at the American Legislative Exchange Council’s major gathering of conservative lawmakers. The model legislation, titled the “Energy Discrimination Elimination Act,” calls for states to identify and divest from financial institutions that boycott or otherwise penalize energy companies for falling short of environmental standards.
Since then, several states have introduced bills based on the model language, with two versions already becoming law. The push has also made its way to the national level. A federal bill proposed last month by the U.S. House’s top recipient of coal industry money would prohibit financial advisers from considering ESG — environmental, social, and corporate governance — factors when making investment decisions.
Now the fight against ESG considerations is spilling out of the halls of Congress and state legislatures. Last week, Utah’s Republican governor and its entire congressional delegation sent a letter to the credit rating agency S&P Global Ratings opposing the company’s plans to add ESG scores to its global credit ratings for state and local governments.
“S&P’s ESG credit indicators politicize what should be a purely financial decision,” the politicians argued in their letter, according to Bloomberg. The letter was celebrated on Twitter by the American Legislative Exchange Council (ALEC) and by the State Financial Officers Foundation, a conservative nonprofit whose board of directors and advisory committee include ALEC executives.
The timeline illustrates the shadowy, concerted way the fossil fuel industry and its political lackeys are responding to the growing threat of the divestment movement. In recent years, climate activist organizations have been pushing financial institutions to stop financing fossil fuel companies, given fossil fuels’ role as the leading source of carbon dioxide emissions.
While the effort has been slow going, banks including JPMorgan Chase and Citigroup have pledged to reduce their fossil fuel financing to align with the emission reduction goals of the Paris Agreement. Now, in response, the oil and gas industry is trying to do everything in its power to actively punish financial institutions and advisors for trying to take reasonable steps to address the climate crisis.
“I Eat Coal For Breakfast”
Isaac’s model legislation was likely inspired by an anti-energy company boycott adopted by his home state last June. According to the new Texas law, which took effect last September, the state’s comptroller must create a list of financial companies that have limited their commercial relationships with energy companies over emissions concerns, and state investment funds would divest from those companies. Last month, Texas Comptroller Glenn Hegar sent letters to 19 finance companies he believes may be boycotting the fossil fuel industry.
The law had six authors, several of whom have received significant fossil fuel funding. State Sen. Drew Springer (R), for example, has raked in more than $220,000 from the oil and gas industry, making it his top career donor industry. The primary sponsor of the bill in the House, Rep. Ken King (R), has received $378,000 from the oil and gas industry. King’s side jobs include being president of oil well parts supplier Black Gold Pump and Supply and vice president of a family oilfield services business, King Well Service.
In the months after the Texas bill became law, its authors received additional donations from energy companies. State Sen. Brian Birdwell (R) received $1,000 from ExxonMobil PAC and $2,500 from Koch Industries PAC in the second half of 2021. During that same period, state Sen. Bob Hall (R) received $2,500 from Centerpoint Energy PAC and $10,000 from Farris Wilks, an oil and gas industry billionaire whose recent investments in the industry include stakes in hydraulic fracking company U.S. Well Services and pressure pumping firm ProFrac.
Meanwhile, it didn’t take long for other fossil fuel-funded lawmakers in other parts of the country to follow in Texas’ footsteps.
That included Democrat-turned-Republican Rupie Phillips, a West Virginia state senator, who is not shy about his support for the coal industry. His Twitter handle is @4WVCoal and his bio says: “I eat coal for breakfast.” Phillips abandoned the Democratic party in 2017, citing President Barack Obama’s advancing of regulations to reduce coal emissions as one of his reasons for his decision.
On January 13, 2022, Phillips introduced SB 262, which closely mirrors sections of the model bill Isaac proposed to ALEC the month before. The bill calls on the West Virginia state treasurer to compile a list of financial companies that limit their commercial relationships with energy companies because they “[engage] in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy and [do] not commit or pledge to meet environmental standards beyond applicable federal and state law,” or because they do business with such companies. Companies included on the list would be disqualified from entering into banking contracts with the state.
On the same day, Phillips also introduced SB 255, which requires state government entities to divest from any publicly traded securities issued by such financial companies, and requires the state to get written confirmation from its contractors that they will not boycott energy companies during the duration of their state contracts.
While SB 255 has yet to move forward in the legislative process, SB 262 became law last month after it passed overwhelmingly. The law will take effect in June.
The mining industry has been Phillips’ top donor industry over the course of his career. Mining company political action committees (PACs) and employees have given Phillips more than $116,000, with his top industry donor being the PAC of Murray Energy, a coal mining company that is now known as American Consolidated Natural Resources.
According to an email obtained through a public records request by the nonprofit research group InfluenceMap and reported by The New Republic, representatives from American Consolidated Natural Resources co-signed a document that was sent to West Virginia lawmakers in February last year, asking them to pass legislation that would punish finance companies for limiting their fossil fuel industry involvement. Murray Energy’s PAC is also a top donor to the West Virginia Republican Senate Committee, according to the West Virginia Secretary of State.
Last November, West Virginia Treasurer Riley Moore (R) led a coalition of financial officers from 15 states that warned in an open letter to the banking industry that they would take collective action against banks that boycott fossil fuels, which they called “woke capitalism.”
After Phillips’ bill passed last month, Moore put out a statement praising the legislation. “This bill is essential to help us push back against the Biden Administration and its extremist allies who are trying to unfairly pressure banks and financial institutions to divest from the fossil fuel industries,” Moore said.
Moore’s top donor sector has been energy and natural resources, according to the National Institute for Money in Politics. His donors have included PACs affiliated with Arch Coal, Murray Energy/American Consolidated Natural Resources, and power company American Electric Power.
Jim Kotcon, conservation chair of the West Virginia Chapter of the Sierra Club, said that the backers of the law are ignoring financial shifts that are naturally unfavorable to the coal industry.
“Treasurer Riley and the sponsors of Senate Bill 262 are ignoring the on-going trends of bankruptcies in the fossil fuel industry,” said Kotcon. “They need to refocus on their fiduciary responsibility. Wishing that the coal industry is coming back will not overturn the obvious market forces telling us that few if any coal companies will have a profitable future, and investing state dollars in those is bad business.”