OKLAHOMA CITY — The number of financial institutions forbidden from doing business with Oklahoma state investments and funds because of their environmental, social and governance policies has been slashed, but BlackRock Inc. still leads the list.
State Treasurer Todd Russ released an updated list of the restricted institutions after his office conducted “further analysis” of their ESG stances.
“The State of Oklahoma should not be investing money with companies that boycott one of our own industries,” he said. “These financial companies are using ESG policies to promote a political, social agenda instead of allowing the free enterprise system to work.”
Banned companies include:
• BlackRock Inc.
• Wells Fargo & Co.
• JPMorgan Chase & Co.
• Bank of America, N.A.
• State Street Corp.
• Climate First Bank
Climate First’s chief executive officer said in May that his bank does not do any business with the State of Oklahoma.
JPMorgan Chase said Russ’s decision is “baseless – as the nation’s largest bank, we are among the top financers across the energy sector, including traditional energy sources,” the company wrote in response to an inquiry from Southwest Ledger.
“Between 2021 and 2022 we provided over $2 billion in financing and other services to 40 Oklahoma companies in the oil and gas space. Our business practices are not in conflict with this anti-free market decision, and we look forward to continuing to serve customers and communities in Oklahoma.”
JPMorgan Chase had assets totaling $3.2 trillion as of Dec. 31, 2022, according to the Federal Reserve.
State Street also disagreed with the Treasurer’s analysis. “State Street does not discriminate against oil and gas companies, or any other industry sectors,” the company stated. “We would welcome the chance to work with policymakers to provide them further clarity on our stance and to address their concerns.”
State Street, based in Boston, Massachusetts, is the nation’s 12th largest bank, with $298 billion in assets as of Dec. 31, 2022, according to the Federal Reserve.
An inquiry Southwest Ledger sent to Wells Fargo earlier this year went unanswered.
BlackRock responded that it is “a leading investor in the Oklahoma energy sector. On behalf of our clients, we invest over $15 billion in public energy companies based in Oklahoma and $320 billion in public energy companies globally. We invest billions more in renewable energy firms.”
The Treasurer’s original banned list numbered 13.
Institutions that were dropped from the list this time were GCM Grosvenor, Lexington Partners, FirstMark Fund Partners, Stepstone VC Global Partners, William Blair, Actis, and WCM Investment Management.
A spokesperson for the Treasurer said the companies that were removed from the list reported they are not publicly traded and thus do not qualify for the ban. WCM Investment Management also said it previously had not received a questionnaire from the Treasurer’s Office.
‘Boycott’ defined
Boycott of a major industry such as oil and gas “results in less diversification of funds, which can lead to more risks and potentially lower returns for investors,” Russ said.
House Bill 2034, the Energy Discrimination Elimination Act of 2022, requires the State Treasurer to maintain a list of financial institutions that boycott oil and gas companies.
The statutory definition of boycott means companies “without an ordinary business purpose refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with a company because the company (a) engages in the exploration, production, utilization, transportation, sale, manufacturing of fossil-fuel-based energy and does not commit or pledge to meet environmental standards beyond applicable federal and state law…”
Such institutions may be excluded from doing business with the state.
State law decrees that the Treasurer must update the list annually but not more often than quarterly. It also mandates that restricted financial companies must cease engaging in boycotting energy companies within 90 days of receiving notice to avoid potential divestment with the state.
Bank of America invests in Oklahoma
The Stillwater City Council voted in April to borrow money from Bank of America, which offered the lowest interest rate on the city’s $13.5 million project to update municipal heating and cooling systems, install new streetlights, and improve the water infrastructure in order to reduce rising energy costs.
Less than a week later, Treasurer Russ announced that Bank of America was on the list of financial companies banned from doing business with government entities in Oklahoma. Bank of America was one of 13 companies alleged to be “boycotting” oil and gas companies in violation of HB 2034.
The interest rate offered by the next best lender was 0.7% higher, which would cost Stillwater almost $1.2 million more than anticipated.
“It was frustrating,” said Will Joyce, Stillwater’s mayor. “It means we have to do less of the project, we’ve got to take stuff out of it,” Joyce told a newspaper reporter.
Bank of America emailed this statement to the Ledger earlier this year: “We look forward to continued discussion with the Oklahoma Treasurer about the many ways we serve clients and communities in Oklahoma, including in the energy sector.”
Bank of America is this nation’s second largest bank, with assets of $2.4 trillion, according to the Federal Reserve. A fact sheet provided by Bank of America claimed it has a $576 million commercial loan portfolio in Oklahoma and 254,000 “digital active clients” in this state.
Bank of America financed the Rock Falls Wind Farm in Grant and Kay counties with an $83.1 million tax equity investment.
Rock Falls is a 154-megawatt facility with 60 Siemens turbines that was built by EDF Renewables. Tulsa-based Public Service Co. of Oklahoma acquired Rock Falls on March 31, 2023, and placed it into service for the utility’s customers as of April 1, 2023, PSO Region Communications Manager Wayne Greene said.
The wind farm “produces enough energy to power, on average, approximately 60,000 homes annually,” Bank of America claims. The wind farm “supported nearly 150 jobs during the construction phase, Bank of America stated.
Fuel-free energy from Rock Falls wind farm helps insulate PSO customers against sudden spikes in fuel prices and purchased power like those that occurred during the February 2021 Winter Storm Uri,” Greene told the Ledger. “It also encourages job expansion and creation in the PSO service area and provides funding for public schools and local government through property taxes.”
Energy production critical to economy
State Rep. Mark McBride (R-Moore), principal author of HB 2034, defended his measure.
“This legislation ultimately protects all Oklahomans from the overreach of companies that think they can govern our population through the use of political environmentalism,” McBride said. “Fossil fuels such as oil and gas are a major contributor to the livelihood of many Oklahomans as well as our overall economy. This critical industry employs thousands of Oklahomans and adds tremendously to our tax base. We must protect our assets as a state.”
According to the Oklahoma Energy Resources Board, the total economic impact of oil and gas and component industries in the state in 2022 was $64.9 billion, 27% of Oklahoma’s total economic activity. This included 198,965 direct or supporting jobs and $23.7 billion in salaries and wages.
McBride’s bill – as well as similar measures enacted in several other states – was patterned after “model” legislation promoted by the American Legislative Exchange Council. ALEC is a corporate-funded organization that writes legislation for Republican-controlled states.