The state of Indiana is now part of a multi-state investigation into whether major banks are “colluding” with the United Nations to destroy U.S. fossil fuel companies, according to the state’s attorney general, Todd Rokita.
Rokita said 20 states have served six major U.S. banks with civil investigative demands, which he said acts as a subpoena, to access documents related to the companies’ involvement with the United Nations Environment Programme’s Net-Zero Banking Alliance.
The investigation will focus on alliance members Bank of America Corp., Citigroup Inc., Goldman Sachs, JP Morgan Chase & Co., Morgan Stanley and Wells Fargo & Co.
The alliance was founded in April 2021 and requires members to commit to transitioning their lending and investment portfolios toward net-zero emissions by 2050 or sooner by considering the direct and indirect greenhouse gas emissions resulting from those loans and investments.
As part of their transition plans, alliance members do not have to divest themselves of fossil fuel assets and are encouraged to seek carbon offsets, an action that prevents a certain amount of carbon dioxide from reaching the atmosphere to compensate for emissions that happen elsewhere. Carbon offsets could, in theory, allow for fossil fuels to continue to be used without making climate change worse, although activists and scientists have said offsets are ineffective for combatting climate change and are essentially a “license to pollute.”
The alliance guidelines are not strictly enforced and apply on a “comply-or-explain” basis, and the six firms being investigated by Rokita and other states have so far refused to stop financing fossil fuels.
Despite this and the alliance’s fossil fuel flexibility, Rokita and other Republican attorneys general of fossil fuel-dependent states are investigating the firms for alleged “collusion” to destroy American fossil fuel companies.
“These banks appear to be colluding with the U.N. to destroy American companies that specialize in fossil fuels or otherwise depend on them for energy,” Rokita said in a press release. “They are pushing an investment strategy designed not to maximize financial returns but to impose a leftist social and economic agenda that cannot otherwise be implemented through the ballot box.”
The investigation is part of a nationwide effort to secure the future financing for fossil fuels.
Encouraged by fossil fuel-funded organizations like the American Legislative Exchange Council, Rokita and other lawmakers influenced by the fossil fuel industry have targeted financial institutions that have made, or are believed to have made, investment strategies based on non-financial considerations, like climate change impacts or greenhouse gas emissions. These considerations are known collectively as ESG, or environmental, social and governance factors.
Lawmakers in Kentucky, Oklahoma, Tennessee and Texas have passed laws to cut ties with financial institutions that “boycott” energy companies by using ESG considerations or any other method as part of that effort. Lawmakers in 17 Republican-led states introduced 44 bills that would do the same elsewhere.
The attempt to pass such legislation in Indiana was defeated when Rep. Ethan Manning pulled House Bill 1224, a bill nearly identical to the group’s “model legislation,” soon after he introduced it. The bill could be resurrected in the next legislative session.
Rokita released an advisory opinion in September that was spurred by a request from ALEC member Sen. Eric Koch, saying that investments by the Indiana Public Retirement System Board of Trustees made with ESG considerations in mind would violate state law.
Rokita claims the ESG considerations and the banks’ net-zero goals would hurt the state’s economy.
“This new woke-ism in the financial sector poses a real threat to everyday Hoosiers,” Rokita said. “Indiana’s farmers, truck drivers and fuel-industry workers are hurt when the radical Left attacks whole segments of our economy. And it’s troubling that these banks in the Net-Zero Banking Alliance are taking marching orders from UN globalists all-too-eager to undermine America’s best interests.”
A recent study indicates anti-ESG policies could end up having a significant negative financial impact in Indiana.
Researchers from the Wharton School of the University of Pennsylvania examined what happened when Texas boycotted financial institutions over their ESG policies, finding the rule drove down competition for borrowing and cost taxpayers millions of dollars in extra interest.
After Texas passed two anti-ESG laws in September 2021 that banned local governments from entering into contracts with banks that adopted ESG policies affecting the oil and gas industry and the gun industry, five of the largest underwriters of municipal bonds left the market in the state. That includes JP Morgan Chase, Goldman Sachs, Citigroup and Bank of America, four of the six firms being investigated by Indiana and other states.
Within the first eight months of the laws being enacted, Texas cities were forced to negotiate borrowing terms with other financial institutions that had worse rates than the departing banks. Those cities will pay between $303 million and $532 million more in interest than they would have if those banks had stayed, according to the report.
The Indiana Environmental Reporter reached out to the firms being investigated, but none have yet offered any comment on the investigation.