West Virginia has banned four more banks it said "engaged in boycotts" of coal and other fossil fuels, bringing to nine the number of large financial firms now unable to do business with state agencies. None of the new blacklisted banks currently have state contracts, according to the West Virginia State Treasury office.
Three of the banks — Citigroup Inc., TD Bank NA and HSBC Holdings PLC — were among the top 12 largest lenders to fossil fuel projects globally between 2016 and 2022, according to the report Banking on Climate Chaos. The fourth bank that West Virginia restricted on April 8, Northern Trust Co. is not listed in the report published annually by environmental groups tracking fossil fuel investments of the world's top 60 banks.
Such investments alone may not keep a bank off the state's non-grata list, said Jared Hunt, a spokesperson for West Virginia Treasurer Riley Moore. The bank restrictions are primarily based on a company's public policy statements and forward-looking investment plans, Hunt said in an interview. Banks may also be phasing out lending to coal companies, for example, while continuing to invest in oil and natural gas, which would lead to restrictions, he said.
"We do evaluate their perspective on each industry," Hunt said.
Banks lending billions to industry
Several banks pushed back on West Virginia's description of their corporate policies.
"Citi is not engaged in a boycott of energy companies as evidenced by the fact that we continue to lend to these companies and have substantial credit exposure to the industry," a spokesman for the fourth-largest US bank said in an email. "We believe our policies are consistent with our regulatory requirements regarding risk management as well as with West Virginia law."
HSBC also countered that the bank's policies allow for continued corporate lending to customers in the energy industry while supporting "an orderly and just transition."
"We seek to work with — not boycott — energy companies," a spokesperson for the bank said in an email.
A spokesperson for Northern Trust noted that it has about $52 billion in investment exposure to companies in the "traditional" energy sector.
"Northern Trust provides services for managing oil, gas and other fossil fuels for clients in our Wealth Management business, serving more than 20,000 oil, gas and mineral interests in the United States and Canada," the spokesperson said in an email.
The Toronto-Dominion Bank did not return requests for comment.
Two other banks the state evaluated in its latest round of fossil fuel "boycott" reviews took steps to escape restriction.
Bank of Montreal can continue to contract with state agencies after it agreed to pull a coal policy statement from its website, Hunt said. So can Fifth Third Bancorp after its representatives met with Moore and convinced the treasurer "they were not engaged in what would be considered a boycott under our state law," the treasury spokesperson said.
A spokesperson for Bank of Montreal said its policies "represent a comprehensive, risk-based approach that underscores our commitment to sound and prudent business practices." Fifth Third Bank did not return requests for comment.
Moore, who is an active member of the GOP-led movement to eliminate environmental, social and governance (ESG) investment risk assessments, expanded the state's bank policy review in 2024.
West Virginia now seeks to capture any bank that "could realistically be capable of bidding on the state's major banking contracts, based on volume capabilities and other minimum mandatory requirements in state banking contracts," Hunt said. Earlier, the only banks targeted were already providing services to the state.
The West Virginia treasurer's effort to purge the state of financial institutions deemed to be violating the state's pro-fossil fuel policies began in 2022, the year after he successfully asked lawmakers to make such restriction mandatory. Moore is now running for Congress on a platform of fighting what he calls the "radical green energy agenda."