Kentucky threatens divestment from 11 companies in anti-ESG move

January 5, 2023

Republican states continue to shun ESG investments as 11 major financial companies face potential divestment from Kentucky.

Kentucky State Treasurer Allison Ball has threatened to divest in companies participating in the “boycott” of energy companies.

Citigroup, JPMorgan Chase, and BlackRock are some of the financial institutions that have been warned.

Ball said: “When companies boycott fossil fuels, they intentionally choke off the lifeblood of capital to Kentucky’s signature industries.”

Last year, the Kentucky General Assembly passed a bill which instructed the state treasurer to publish an annual list of financial institutions engaging in energy “boycotts”.

Companies which have been identified as participating in boycotts risk potential divestment from the Kentucky state government unless the boycott is reversed within 90 days.

Kentucky has justified the threat of divestment as the state relies on fossil fuel production and use, with boycotts potentially detrimental to the economy.

According to Ball’s department, the energy sector represents 7.8% of Kentucky’s total employment.

Ball added: “Traditional energy sources fuel our Kentucky economy, provide much needed jobs, and warm our homes. Kentucky must not allow our signature industries to be irreparably damaged based upon the ideological whims of a select few.”

However, the targeted companies have contested the notion that they are engaging in a boycott of energy companies.

BlackRock has stated it “does not boycott energy companies and will continue to be investors across the energy sector” and its “only agenda is delivering the best financial results for our clients.”

A spokesperson for JPMorgan said: "We believe our business practices are in line with Kentucky law, and we are hopeful a deeper look at these facts would lead to reconsideration."

Kentucky is the latest republican state to penalise financial firms for not engaging with energy companies.

Anti-ESG sentiments have continued to grow across Republican states, leading to the boycott of several financial institutions.

In December, Florida divested $2bn from BlackRock for “focusing on ESG rather than higher returns for investments.”

In September, Texas published a blacklist of ‘Financial Companies that Boycott Energy Companies’ to encourage divestment from state pension funds.