|
Many thanks to Senator Sandy Salmon for granting permission to share this well laid out explanation of ESG's. Senator Salmon has been a tireless fighter in the fight for freedom. This is important issue for all of us to understand!
What is ESG?
ESG stands for environmental, social, governance. Large corporate directors and business investors, with “indirect” input from the federal government, designate these scores based on how well the person or small business or company adheres to a number of policies, such as “green” climate change-inspired policies, opposition to the use of fossil fuels, opposition to production agriculture, opposition to gun manufacture, beliefs about racial equity informed by Critical Race Theory (CRT), including anti-racism, white privilege, etc., support for abortion on demand and/or adherence to LGBT ideology.
Is this really an issue?
Yes. It has become a trend to deny loans or investment capital if a company’s ESG score is not high enough, meaning the company does not adhere strongly enough to the aforementioned policies. This poses a significant threat to individual liberty and the free market economy, seeking to impose progressive and liberal beliefs and values on other businesses and eventually families and individuals. A 2023 report by the International Federation of Accountants and the Association of International Certified Professional Accountants found that 95 percent of large global companies produce ESG reports each year. I met with a manufacturer recently who is seeking to raise its ESG score, indicating pressure from other companies they work with. This manufacturer is having to increase its expenses to meet these ESG demands. This should not be happening.
Where are we at in Iowa addressing ESG?
We have a bill SF 507 that was passed in the Iowa Senate last year and was sent to the House and was amended there. It was sent back to the Senate and awaits action on the Senate floor. I am hopeful we will get that passed out next year.
What does the bill do?
This bill requires managers of public funds such as IPERS to consider only financial factors when making investment decisions (as has always been) and not ESG ratings. This bill prohibits these ESG scores from being used in decisions regarding investments of our public funds. A number of other states, such as Texas, have taken this exact type of action.
What about ESG affecting me as an individual?
What about my local bank? Am I protected from my bank using ESG scores to determine whether I get a loan? First, you should check with your local bank/credit union. Some do use them; some do not. Right now Iowa law is silent on that. This is a protection for consumers we need to require. Some states have proposed regulations that would stop banks and/or insurance companies from using ESG when making determinations about access to banking or insurance services. This is because a number of the world’s most powerful banks and insurance companies have, to varying degrees, weaponized ESG to screen out businesses and even some individuals who refuse to comply with those institutions’ social justice or environmental policies.
Although there are many examples of financial institutions flexing their muscles as a tactic to create larger social changes, perhaps the most economically important is that virtually every large bank in the United States has committed to forcing the businesses they work with to phase out their use of fossil fuels—even if it causes economic harm to customers and business.
If fulfilled, these pledges would necessitate that banks eliminate all or nearly all lending and banking activities with customers who use fossil fuels, including individuals who drive gasoline-powered motor vehicles, significantly impacting virtually every family and industry in the United States.
On May 2, 2023, Florida Gov. Ron DeSantis signed into law historic legislation that restricts banks’ use of ESG metrics, the first time such a ban has been established at the state level. Some have claimed that states, including Florida, have no right to prevent banks from imposing ESG standards on their customers. They have claimed state policymakers do not have authority to regulate many of the largest banks operating within their state’s borders, because federally chartered banks can only be regulated by federal agencies. Supreme Court rulings reinforce existing federal law which does grant states the power to regulate banks’ use of ESG and other forms of social credit scoring under federal consumer protection laws. Iowa should follow Florida’s example.
The ESG social credit scoring system is very similar to what is used in Communist China to control its people and coerce them into adopting government-preferred beliefs and behaviors. Our federal government uses various financial incentives and other forms of economic and social pressure to get private business to do the same thing. It is unacceptable and outrageous and should not happen.
| 
