Indiana would cut ties with banks that ‘boycott’ fossil fuels under House bill

Indiana wouldn’t be able to do business with banks that want to divest from fossil fuels under a state House bill, HB 1224.

The author of the bill, Rep. Ethan Manning (R-Logansport) said banks in favor of clean energy are “discriminating against” Indiana businesses by choosing not to lend to or invest in coal, oil, and natural gas companies.

“We cannot sit idly by and allow these companies to get away with harming energy companies — and Hoosiers themselves — not based on financial returns, but based on some political philosophy,” he said.

Dax Denton with the Indiana Bankers Association said these companies have plenty of banks that are willing to lend to them. But he said this bill could open banks up to lawsuits if they don’t — even if they have other reasons for rejecting a loan.

“Credit risk, portfolio concentration, reputational risk, regulatory risk — we make loan decisions for a variety of reasons, we make business decisions for a variety of reasons,” Denton said.

Denton said many larger banks already have environmental policies and the legislation makes it unclear which banks would be affected. He said banks are also feeling pressure to meet national and international climate goals and have to take those into account.

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Chenyao Liu goes to Carmel High School and is a member of the youth activist group Confront the Climate Crisis. She said the bill goes against the basis of the U.S. economy — free-market competition.

“If companies that stay with fossil fuel energy want government contracts, they have to prove themselves to be the most competitive. The Statehouse cannot clear out their competition,” Liu said.

The Indiana Department of Administration — which procures good and services for the state — also opposes the bill. Officials with the agency said it would further limit the number of financial institutions the state can contract with.

Similar legislation has been proposed in Texas, Alaska, and North Dakota.

Indiana ranks eighth for coal production in the country. Though the state isn’t as well known for producing crude oil, the U.S. Energy Information Administration calls BP’s Whiting Refinery in northwest Indiana “largest inland crude oil refinery in the nation.”

Contact reporter Rebecca at rthiele@iu.edu or follow her on Twitter at @beckythiele.

Indiana Environmental reporting is supported by the Environmental Resilience Institute, an Indiana University Grand Challenge project developing Indiana-specific projections and informed responses to problems of environmental change.