Bank of the West’s decision to divest from certain fossil fuel investments has run headlong into threats of retaliation in states that get much of their revenue from coal, oil and natural gas extraction.
The San Francisco-based bank recently made it known that it would be “investing where we feel we can make the most impact” and withdrawing support for companies and business activities that are “detrimental to our environment and our health.”
That includes no longer doing business with companies whose main activity is tied to oil and gas from shale or tar sands. It also will no longer finance oil and gas exploration or production projects in the Arctic. Nor will it finance coal mines or coal-fired power plants that are not actively involved in the energy transition. The company also is cutting ties to tobacco-related businesses.
“As the bank for a changing world, we’re continually seeking to improve the ways we help our customers, while contributing to more sustainable and equitable growth,” the company said online.
Overall, the world’s biggest banks increased their funding in fossil fuels in 2017 by 11 percent to $115 billion, according to a recent report from Sierra Club and other environmental groups. But several banks, largely in Europe, have taken an environmental stand similar to Bank of the West. That includes HSBC, Royal Bank of Scotland and Bank of the West’s parent company, BNP Paribas. The move also comes as some investors, both institutional and individual, push for more environmentally responsible investing.
Still, it’s a position that doesn’t sit well in some parts of the West, such as Wyoming and Colorado, that rely heavily on energy production for their livelihood.
Bank of the West has branches in every city and several towns in Wyoming, the top coal-producing state in the country. Fossil fuels are big business in Wyoming – extraction provides about 70 percent of its state revenue.
State Treasurer Mark Gordon threatened Thursday to stop depositing with the bank certain state funds intended to encourage local lending. The state has deposited $63 million with Bank of the West in Wyoming through the program over the years. Gordon also said he will ask the State Board of Deposits to review the bank’s status as a public depository for the state.
Wyoming Gov. Matt Mead made a similar threat Thursday to revoke public depository status, which would prohibit state agencies from using Bank of the West for petty cash accounts. Campground fees collected at state parks, for example, couldn’t be deposited at the nearest Bank of the West.
Neither Gordon nor Mead was sure how much money Wyoming state agencies have in such Bank of the West accounts.
U.S Senator John Barrasso, R-Wyoming, also jumped into the fray. He sent a letter to the bank’s CEO this week saying that while the decision “may be fashionable” in San Francisco, it is misguided and hurts families in Wyoming.
Just over the state line in the coal mining area of Moffat County, Colorado, local officials are weighing whether to move public funds to some other bank.
Some locals have taken the position personally. Stacy Razzano, a Bank of the West manager in the area who is also the daughter of a coal miner, told several local news outlets that she would resign after 27 years with the company because of the stance, which she saw as bad for the community. She could not be reached Friday for comment.
Bank of the West said that this isn’t necessarily a new position for the company. “Energy transition has been a focus for years, and is a continuation of a direction that has been under way,” it said in a statement.
The bank and its parent company have been increasing their investment in renewables, while putting guidelines in place around a number of sectors for some time. The bank said it has had a long-term ban on arctic drilling, and it instituted guidelines around coal-fired power plant investment in 2015. In 2017, BNP Paribas committed to exiting fracking and tar sands work.
It appears some of the attention has come about because of widespread advertising of its position, found everywhere from social media to billboards throughout a San Francisco subway station.
The bank’s position isn’t all being received poorly. Some environmentalists welcome the change. Ben Cushing, campaign manager for the Sierra Club’s Beyond Dirty Fuels campaign, said this is an example of the growing movement to defund fossil fuels.
“Banks that continue with business as usual will soon be left behind,” he said.
Companies often must strike a delicate balance with such decisions. In March, after a shooting killed 17 people at a Parkland, Florida, high school, Delta Air Lines ended a discount program for National Rifle Association members. Georgia lawmakers retaliated by withdrawing a proposed tax break on fuel that would have saved the airline millions.
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