Why banks are fighting ESG legislation

In state legislatures throughout the country, lawmakers are introducing bills to protect the rights of their constituents concerning freedom of speech and freedom of association.  Bank lobbyists are aggressively opposing these consumer protection bills, which raises the question: why?  The banks say they do not use ESG (Environmental, Social, and Governance) metrics, so why oppose these consumer protection bills that merely erect some guardrails to ensure that the rights, freedoms, and choices of citizens are protected?

The banks and others opposing legislation to protect consumers and small businesses from ESG discrimination say the legislation interferes with the free market, that the government is meddling with how a private business operates.  However, does a free market in financial services exist today?  The aggressiveness of banks' opposition to these ESG bills hints that there may be more to the story.

When the biggest banks in the world partner with large businesses, federal regulators, the United Nations, and entities in Net-Zero 2050 alliances, we are no longer operating under a free market.  Crony capitalism, corporatism, or fascism, but not a free market.  Individual citizens and independent businesses are seeing their choices and their freedoms slip away. 

For those who do not believe that government and banks would ever collude to discriminate against a legal business, look into Operation Choke Point, an early test run of the "public private partnership" to enforce a political ideology.  From Forbes, "Newly unsealed documents show top FDIC officials running operation choke point," federal regulators conspired to shut payday lenders and firearms business out of the banking system.  Is that how a free market operates?

Some say the ESG movement is just the latest bogeyman, that there is no proof that the movement is impacting individuals and businesses.  That is false.

In North Dakota, the director of mineral resources, Lynn Helms, recently returned from an energy conference in Houston and reported that oil companies now see the Bakken in North Dakota as a mature oil play and are shifting capital elsewhere.  Among the reasons Helms cited for the about-face: a surge in attention among oil industry operators to their carbon footprints.  According to the article, "[w]ith financiers increasingly factoring climate consequences into their investments, achieving a gas capture level near 100% has become 'goal number one' for many oil producers, Helms said, even more than expanding output."

During the 2021 legislative session in North Dakota, representatives of the lignite industry testified that coal operations are seeing increasing insurance premiums and a drop in the number of insurance companies willing to write insurance for any price.  This is the ESG movement in action, and it will not stop with oil and coal.

Bank lobbyists say that no one should tell bankers how to run their businesses.  The reality is that bankers are already being told how to run their businesses by the federal government, international agencies, and other influencers, whether they admit it or not.  And that is bad news for small businesses and individual citizens.

The bank lobbyists who testify in opposition to the ESG consumer protection bills should be asked if any banks they represent have joined the U.N. Net-Zero Banking Alliance.  The Alliance website says banks representing more than 40 percent of global banking assets are committed to aligning their lending and investment portfolios with net-zero emissions by 2050.  In their own words: "The Alliance will reinforce, accelerate, and support the implementation of decarbonization strategies."

American banks that have signed on to the U.N. Net-Zero Banking Alliance to date include Bank of AmericaBlue Ridge BankCitiJPMorgan ChaseMorgan StanleyGoldman Sachs, and Wells Fargo.

The bank lobbyists should be asked how this alliance plans to meet the stated objective of reinforcing, accelerating, and supporting the implementation of "decarbonization strategies."  Will the banks alter their business model?  Will this alliance drive decisions on providing banking services to certain sectors, businesses, and individuals?

Also, does any of these seven large financial institutions have relationships with local state-chartered banks?  If so, will the goals of the U.N. Net-Zero Alliance have an impact on how these large banks work with smaller community banks?

We can ask the same questions of the large insurers.  Does any of the insurance companies doing business in your state belong to the Net-Zero Insurance Alliance?  If so, what impacts will there be on businesses in the state as the goals of the Net-Zero Insurance Alliance are pursued?  A recent Bloomberg article shows that some efforts of the Net-Zero Insurance Alliance had to be scaled back, for now, when attorneys working with the group said certain actions could raise antitrust issues.  The solution they are working on with government allies?  Simply rewrite the antitrust laws.

Government's role is to protect the rights, freedoms, and liberties of individuals.  Lawmakers at the state level should understand what the companies, governments, and other entities signing on to the ESG movement, the Net-Zero 2050 alliances, and the Great Reset intend to do.  Read their own words — they are not hiding anything.  And take them at their word.

Of course, this is just another conspiracy theory, right?  Governments and banks would never join forces to track the social media posts of individuals, their banking activity, their alliances, and occupations to crack down on freedom of speech or freedom of assembly.  This isn't the Hunger Games, is it?  Just ask the truckers in Canada and their supporters.

Bette Grande (bgrande@heartland.org) is a government relations manager at The Heartland Institute.

Image: Adam Smith.

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