Republican-led states have unleashed a policy push to punish Wall Street for taking stances on gun control, climate change, diversity and other social issues, in a warning for companies that have waded in to fractious social debates.
Abortion rights are poised to be the next frontier.
This year there are at least 44 bills or new laws in 17 conservative-led states penalizing such company policies, compared with roughly a dozen such measures in 2021, according to a Reuters analysis of state legislative agendas, public documents and statements.
While some of the individual moves have been reported, the scale and speed at which such “anti-woke” state laws and policies are ballooning and the challenges they are creating for Wall Street companies is detailed here for the first time.
The Merriam-Webster dictionary defines “woke” as being aware of and actively attentive to issues of racial and social justice, but it is often used by conservatives to disparage progressive policies. The term has gained traction as America has become more politically polarized over issues from racial justice and LGBTQ rights to the environment and COVID-19 vaccines.
Reuters counted bills considered and state laws passed in 2021 and 2022, although some state officials are also using executive powers to punish Wall Street.
The growing restrictions show how America’s culture wars are creating new risks for some of the most high-profile US companies, forcing them to balance pressure from workers and investors to take stances on hot-button issues with potential backlash from conservative policymakers.
West Virginia and Arkansas this year, for example, stopped using BlackRock for certain services, due to its climate stance, according to West Virginia’s Republican treasurer Riley Moore and Arkansas media reports.
In Texas, JPMorgan Chase, Bank of America and Goldman Sachs have been sidelined from the municipal bond market due to laws passed last year barring firms that “boycott” energy companies or “discriminate” against the firearms industry from doing new business with the state.
In many cases, the measures target a range of companies, restricting their ability to conduct state business. But financial institutions have been primary targets due to the pivotal roles they play in the economy and the early stances many took on such issues as fossil fuel and firearms financing.
Republicans say the policies of such companies deprive legitimate businesses of capital.
“They’re using the power of their capital to push their ideas and ideology down onto the rest of us,” said Moore. He spearheaded a law, passed in March, refusing business to banks that “boycott” fossil fuel companies and has rallied officials from 16 other states to promise to adopt similar policies.
With several major financial companies stepping in to cover travel costs for employees seeking abortions after the Supreme Court last month reversed federal abortion rights, the Republican push to sanction Wall Street for “woke” stances is likely to grow.
Republican Texas lawmaker Briscoe Cain said he plans legislation to outlaw such coverage and prohibit companies that provide it from receiving any Texas state business or contracts.
“No corporation doing business in Texas will be allowed to subsidize abortions or abortion travel in any manner,” Cain told Reuters in an email.
The new curbs will make it harder for financial firms to do a range of state business, from bond underwriting to managing state funds, depository accounts and government credit cards, according to interviews with more than a dozen industry sources, bank lobbyists and lawyers.
Such contracts can be worth several million dollars each, public procurement data shows.
JPMorgan, for example, underwrote $3.2 billion worth of Texas muni bonds last year, compared with $210 million so far this year, Refinitiv data shows. Bank of America, which underwrote $3.7 billion in Texas muni bonds last year, has done none this year.
Some smaller firms, including Ramirez & Co. and Loop Capital Markets, meanwhile, have jumped more than 10 places so far this year in the Texas muni bond market bookrunner rankings, based on deal values.
To be sure, some Democratic-led states are also looking to tilt the scales. Washington state floated a “climate resiliency fee” for institutions that fund fossil fuel projects. California is considering a bill that would stop its pension plans, the country’s largest, from investing in fossil fuel companies.
But states led by Democrats are not pursuing as many punitive measures, according to the review and sources.
“We’re going to see a lot more of these statutes on one side of the coin or the other,” said John Crossley, a partner at K&L Gates who focuses on energy. “It’s going to make it more and more difficult for people to operate in these markets.”
Spokespeople for the above financial firms declined to comment or did not respond to requests for comment.
Financial firms say they aim to provide comprehensive healthcare benefits. They also argue government restrictions will drive up costs for Americans, and they dispute the characterization of their policies as boycotts.
BlackRock, the world’s largest asset manager and a frequent target of Republican attacks, for example, has told Texas officials that while it has joined various efforts to cut greenhouse gas emissions, it supports fossil fuel companies.
“The economy and financial system are best served when banks of all sizes can make their own banking and lending decisions about how to meet the needs of their communities based on their business model and risk tolerance,” said Joseph Pigg, senior vice president at the American Bankers Association.
The review shows “anti-woke” measures are gaining ground not only in traditional conservative strongholds such as Texas and Kentucky but also in so-called purple states – whose voters swing Democratic or Republican – such as Arizona and Ohio.
The issues such measures target are also mushrooming.
Guns and energy were the focus of the roughly dozen state laws and bills last year and of at least 30 legislative measures this year.
But this year there were also more than a dozen bills relating to social and other issues, including “divisive concepts” like critical race theory – an academic theory that racial bias is baked in to US laws and institutions – mandatory COVID-19 vaccines, or the use of “social credit scores,” the Reuters analysis shows.
The latter is a theory that companies may take into account an individual’s political leanings when providing and pricing services.
In April, for example, Florida made it illegal for companies to require training that might make staff feel “guilt” or “anguish” because of past actions by members of the same race. Unveiling the bill, Florida Governor Ron DeSantis flagged Bank of America as one company conducting such “woke” training.
A bank spokesman said the materials were offered to hundreds of companies by a nonprofit and were not part of the bank’s training materials.
While the measures reviewed do not target corporate abortion policies, Cain said he expected other Republican-led states to pursue business restrictions on companies with such policies.