Republicans Hit Back at Banks for Making Climate Moves
Republican-led states are punishing financial asset managers incorporating climate risks into their investment strategies. Many have enacted boycotts against financial institutions deemed "overly woke” as a result of their environmental, social, and governance (ESG) campaigns. In Kentucky, policymakers voted to allow state officials to stop doing business with any financial institution that refuses to invest in fossil fuels. Texas prevented Goldman Sachs and JPMorgan Chase from bond offerings since they stopped investing in certain fossil fuel developers and coal mines. In West Virginia, state officials have decided to boycott six major financial institutions, including BlackRock, Wells Fargo, and JPMorgan Chase because of their hesitance to work with the fossil fuel industry.
DW: Banks increase funding for fossil fuels despite 'net-zero’ pledges, February 15, 2022.
Never mind that many of the climate commitments made by these firms are incremental at best, and outright greenwashing at worst. For example, JPMorgan Chase is a frequent target of these Republican boycotts, and touts its clean energy investments alongside its pledge to stop investing in coal projects. But the bank funneled $382 billion into fossil fuels in the last five years, even stated that it "does not ‘boycott’ energy companies.” Instead, it claims to be making investment decisions for "ordinary business reasons.”
In refusing to acknowledge the financial impacts of climate change, Republicans are not only misinforming stakeholders but, but their constituents and hindering divestment from fossil fuels, a key form of climate action.
Our Eden: Your Bank is Funding Climate Change, November 13, 2021.
Why This Matters
While Republican politicians maintain that financial institutions have no incentive to go green other than to appeal to "woke environmental zealots,” this couldn’t be further from the truth. Climate change will, for certain, incur massive financial risks. Insurance firm Swiss Re predicts that climate disasters will cost as much as $23 trillion by 2050, more than the pandemic and 2009’s Great Recession combined. Last month, UN Secretary-General António Guterres called fossil fuel investments "delusional” given the energy crisis. In reality, going green is often a smart financial move. A recent study showed that oil companies’ improvements in sustainability and diversity increase their stock prices and make them more likely to attract larger investments.
NowThis: How the GOP Has Changed on Climate Change, July 16, 2021.
PBS: War on the EPA (full documentary), May 25, 2021.
The GOP Fights Back
The State Financial Officers Foundation (SFOF), a nonprofit that includes 27 Republican state treasurers and auditors across in 23 states, has also played a role in undermining green investments. The SFOF blocked Sarah Bloom Raskin’s nomination to the Federal Reserve for her desire to accurately measure and account for climate change’s financial risks. The foundation is also in opposition to a proposed SEC rule requiring publicly traded companies to disclose how climate change affects their business, including emissions from operations and product use.
All the while, climate action is less controversial than ever. Around 66% of Americans believe climate change is caused by human activities, and 69% are in favor of expanding wind and solar energy. The irony is that coalitions like the SFOF accuse those in favor of climate action as having "political agendas” while the GOP continues to undermine public interest in the name of protecting the fossil fuel industry.
SEC: The SEC & Climate Risk Disclosure - Office Hours with Gary Gensler, July 28, 2021.
SEC: ESG Investing | Office Hours with Gary Gensler, March 3, 2022.
NBC: Are Major Companies Living Up To Their Net-Zero Pledges To Combat Climate Change?, February 10, 2022.