Oklahoma bans first 13 companies from state business for ESG policies

Oklahoma's battle with financial companies that boycott energy companies entered a new round this week as Treasurer Todd Russ listed 13 companies banned from doing business with the state.

But don't look for any action soon. Those 13 companies have 90 days to tell the state it has stopped boycotting energy companies. And if they haven't stopped their boycott, the law grants the state six months to divest itself of 50% of investments with the financial company and a full year to divest 100%.

The restrictions are based on a law passed by the Legislature in 2022 that requires the state treasurer to divest Oklahoma from any financial institutions that boycott the energy industry.

Russ sent a letter to 160 companies in February to verify their stance on fossil fuels. JPMorgan Chase, one of the 13 listed that does business with the state, called the designation "baseless" in an email response to The Center Square.

"As the nation’s largest bank, we are among the top financers across the energy sector, including traditional energy sources," the bank said in a statement. "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."

Blackrock said in a statement emailed to The Center Square it has more than $200 billion in investments in traditional U.S. energy companies.

"We look forward to engaging with the Oklahoma Treasurer to discuss how BlackRock serves our clients’ interests in Oklahoma and elsewhere, including over $20 billion of investments in Oklahoma-based public companies made on behalf of our clients and managing public pensions for more than 73,000 Oklahoma beneficiaries," the company said.

Russ said in February the Oklahoma Public Employees Retirement System and Teachers Retirement had more than 60% of its portfolio totaling more than $10 billion managed by BlackRock.

Oklahoma's bill mirrors ones passed in several states that ban agencies from doing business with financial institutions that use environmental, social or governance criteria when making decisions. But some have raised concerns about how much it will cost the states.

A report from The Brookings Institution released last month said Texas' ESG policies could cost the state "$300-$500 million in additional interest on the $31.8 billion borrowed during the first eight months following the implementation of the law."

The cost in Oklahoma is not known yet, Jordan Harvey, Russ' chief of staff, told The Center Square. Even if the state does have to divest itself from some companies, others are expressing interest, she said.

"Economically, we are really strong," Harvey said. "The treasurer is really confident that even some of our own Oklahoma banks will step in."