A leaf sits on top of a pile of coal in Youngstown, Ohio, U.S., September 30, 2020.
A leaf sits on top of a pile of coal in Youngstown, Ohio, U.S., September 30, 2020. Reuters / Shannon Stapleton

Looking to keep doing business in West Virginia amid a review of energy lending policies, several top U.S. banks cited criticism from climate activists as evidence they are not boycotting fossil fuels.

The arguments -- shown in documents provided to Reuters under a public records request -- mark a new bargaining tactic for the industry in its dealings with Republican state officials pressuring banks to keep lending to coal, oil or gas companies.

West Virginia Treasurer Riley Moore may bar six top financial institutions from state business. But climate remains a hot topic for many investors, leaving banks trying to walk a middle path.

In a July 6 letter to Moore, Morgan Stanley Chief Legal Officer Eric Grossman said the Wall Street bank does not penalize fossil fuel companies. Grossman noted the bank was labeled one of the "Dirty Dozen" top fossil fuel financiers in a recent report https://www.ran.org/wp-content/uploads/2022/03/BOCC_2022_vSPREAD-1.pdf by environmental group Rainforest Action Network.

"In considering this report, we believe that one could not conclude that Morgan Stanley is engaging in a 'boycott of energy companies'," Grossman wrote. A firm representative declined to comment further.

In a July 7 letter to Moore, Goldman Sachs Group Inc Managing Director Beverly O'Toole noted its inclusion in the same report, "In support of the extent of the Company's engagement with energy companies."

The report found Goldman Sachs had provided $119 billion in fossil fuel financing since 2016, O'Toole wrote. A Goldman representative declined to comment further.

In similar correspondence to officials in Texas, Morgan Stanley and other banks previously had not cited environmentalists' concerns but rather factors like their fiduciary duty or reputational risks.

A spokesman for Moore said his office would not comment on the bank statements until his review is complete.

A letter https://www.wvtreasury.com/Portals/wvtreasury/Fossil%20Fuel%20Banking%20Letter%20Nov%2022.pdf to U.S. banks last November sent by Moore urges banks "to award financing based on an unbiased, non-political basis."

Ben Cushing, campaign manager for the Sierra Club, which helped produce the Rainforest Action Network report, said pressure from investors and customers will continue on financial firms to consider climate issues.

The notion that banks "are 'boycotting' energy companies is just the latest flavor of climate denial," Cushing said via e-mail.