Comment Less than a week before the midterm elections, Republican lawmakers on Capitol Hill are already preparing to investigate what they see as “woke capitalism,” a reference to Wall Street firms treating climate change as an economic risk. Polls show the GOP will retake the House and Republicans there are preparing to go after the CEOs of major financial firms as well as Gary Gensler, the Democratic chairman of the Securities and Exchange Commission, over their efforts to curb climate change. In the Senate, where polls show a battle for control of the chamber, key senators are pushing legislation to punish businesses that prioritize environmental, social and governance concerns — known as ESG — over pure profits. The moves are sure to escalate the battle ESG investing is having a further chilling effect on Wall Street, where some CEOs are trying to emphasize that their companies are still investing in fossil fuels. Rep. Garland “Andy” Barr (R-Ky.) said in an interview that ESG principles “will be one of the primary points of oversight for the Republican majority” on the House Financial Services Committee, which oversees the banking sector, the insurance and real estate sectors. “My view is that ESG investing is a cancer in our capital markets,” Barr said. “This is a fraud on American investors.” The Securities and Exchange Commission “is a target of our oversight because of this monstrous 534-page climate disclosure regulation,” he added, referring to a proposed rule that would require all publicly traded companies to disclose their greenhouse gas emissions and risks faced by climate change. Not everyone is convinced that Wall Street firms face a real threat from the Republican takeover of Congress. Some see the GOP’s moves as political theater meant to satisfy the party’s base and fuel the nation’s ongoing culture wars. The GOP is on board “A lot of political haymaking,” said Ivan Frishberg, head of sustainability at Amalgamated Bank, which does not work with fossil fuel companies. “But I don’t think that changes what asset managers or banks do in terms of their approach to either managing their assets in a changing climate or engaging in the climate initiatives they’re involved in.” But sustainable investment advocates are bracing for intense scrutiny if Democrats fare poorly in the midterms, leading to high-profile hearings and grilling of administration officials. Rep. Frank D. Lucas (R-Okla.) said he would prefer to seek testimony from Gensler and other Biden administration officials before moving the CEOs of major financial firms such as BlackRock, the world’s largest asset manager. Lucas said he would recommend that approach to Rep. Patrick T. McHenry (RN.C.), who would become chairman of the Financial Services Committee if the chamber changes hands. And Rep. Blaine Luetkemeyer (R-Mo.) said he hopes to call the heads of the big three investment advisers — BlackRock, Vanguard and State Street — that have used their financial power to curb climate change and advance other causes that they are popular among liberals. McHenry was not immediately available for an interview. The SEC did not respond to a request for comment. The SEC proposed a landmark climate disclosure rule. Here’s what you need to know.
“Return to Vigilance” If Republicans take the House in the midterm elections but Democrats retain the Senate, CEOs of major financial firms could face a climate blow. Conservative House lawmakers could criticize companies for their “ESG political bias,” as former Vice President Mike Pence recently described sustainable investing, while on the other side of Capitol Hill, liberal senators could criticize companies for not enough to reduce greenhouse gases. emissions that cause climate change. “We’ve become the loud noise in their right ear after all the screaming in their left ear,” Sen. Kevin Cramer (RN.D.) said of Wall Street firms. In a statement, Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said he would keep holding on The CEOs of the big banks will be held accountable for how they serve their customers and treat their employees and bring them to Capitol Hill to answer for themselves. “We know that when Wall Street neglects communities of color and ignores long-term risks like climate change, workers, retail investors and consumers are the ones who pay the price,” Brown said. Subscribe to The Climate 202, a daily newsletter on climate policy and politics A banking industry official, who spoke on condition of anonymity because he was not authorized to comment publicly, said it is ironic that Republicans are trying to tell businesses not to embrace climate-conscious investing even though the GOP usually extols the virtues of the free market. “Historically, progressives have been more comfortable pushing the private sector to support their initiatives, while many conservatives have believed that the private sector should be free to make the decisions they want to make,” the official said. “That has certainly been reversed in recent years. And I think it’s because some conservatives felt they lost the battle and these companies were drifting toward vigilantism.” Fossil fuel companies have aggressively lobbied to loosen the SEC’s climate disclosure rule, putting pressure on Republicans to defend the interests of an industry they championed. “Banks and investors should not use ESG as a prerequisite to categorically discriminate against an entire industry,” said Aaron Padilla, vice president of corporate policy at the American Petroleum Institute, a powerful trade group that represents the oil and natural gas industry. gas. Cramer said he sees no inconsistency between defending free market capitalism and controlling sustainable investment. He added that conservatives have often sought to take a collaborative — not combative — approach to the sustainable investment debate with executives from the banking industry. After introducing a bill in the spring of 2021 to prevent banks from discriminating against the fossil fuel industry, Cramer said he had pleasant phone calls with five bank CEOs: Jamie Dimon of JPMorgan Chase, Jane Fraser of Citigroup, Brian Moynihan of Bank of America, Charlie Scharf of Wells Fargo and David Solomon of Goldman Sachs. A few months later, Solomon flew to North Dakota to participate in a town hall with the senator. Sen. Dan Sullivan (R-Alaska), who has introduced separate climate risk mitigation legislation Appraisers at BlackRock, Vanguard and State Street — which manage more than $20 trillion in combined assets — have also discussed the bill with industry executives, a spokesman said. “I fully expect these conversations to continue into next year,” Sullivan said in an emailed statement. Sen. Tom Cotton (R-Ark.) accused BlackRock and other Wall Street firms of “operating like a climate cartel” and contributing to high gas prices. But there is no evidence that sustainable investment has affected gas prices, which have risen for a variety of reasons, including tightening global oil markets and Russia’s invasion of Ukraine. Larry Fink, the chief executive of BlackRock, defended his firm’s push to hold companies accountable for environmental and social progress. In his annual letter to Corporate America in January, he argued that focusing on ESG principles is not at odds with making money. BlackRock’s Larry Fink Tells Fellow CEOs Businesses Are Not ‘Climate Police’ “We focus on sustainability not because we are environmentalists, but because we are capitalists and loyal to our customers,” Fink wrote in the letter, adding, “Capitalism has the power to shape society and act as a powerful catalyst for change. But business can’t do this alone and they can’t be the climate police.” At the same time, BlackRock rejected claims by conservative state officials that the company discriminates against fossil fuels. In Texas, for example, a new law prohibits the state’s pension and mutual funds from doing business with companies that the state comptroller says are “boycotting” the oil and gas sector. “We are NOT boycotting the energy industry,” BlackRock says on its website in response. “On the contrary: BlackRock’s clients are some of the biggest investors in the energy industry. In the US alone, we have invested $170 billion on behalf of our clients in US energy companies, including pipelines and power generation facilities.” Dimon also defended JPMorgan’s continued investment in fossil fuels, even after the company announced in 2020 that it would stop lending to new coal mines or coal-fired power plants. At a House Oversight Committee hearing in September, Rep. Rashida Tlaib (D-Mich.) pressed Dimon on whether he would commit to stopping funding for new oil, gas and coal projects with huge carbon footprints that threaten the climate goals of the world. “Absolutely not, and that would be the road to hell for America,” Dimon replied. Contrary to the views of most Republicans, Democrats and climate activists argue that investing in fossil fuels is becoming increasingly risky as the world transitions to cleaner forms of energy. The International Energy Agency predicted last week that demand for coal, natural gas and oil will peak in the near future, despite an energy crisis sparked by Russia’s war in Ukraine. Liberals and activists also point to the growing financial burden Global warming is causing stronger storms, rising seas and raging wildfires. The United States was hit by 20 weather and climate disasters last year that cost at least $1 billion each, according to the National Oceanic and Atmospheric Administration. ‘They’re not slowing down’: The rise of billion-dollar disasters In California, massive wildfires have caused massive losses…
