“The House Financial Services Committee will hold the Administration accountable for its continued efforts to force their political priorities through our financial system,” Chairman Rep. Patrick McHenry (R-NC) vowed Tuesday, reacting to the Treasury Department’s release of nine “principles” for financial institutions to follow.
“With Treasury’s most recent guidance, the Biden Administration is again prioritizing its progressive climate agenda over sound economic management,” Chairman McHenry said in a statement, warning that, while Treasury claims its standards are “voluntary,” institutions will be punished if they don’t comply:
“Regulators should be focused on immediate risks to our financial system—not climate policy beyond their expertise and statutory authority.
‘With only a thin veil of setting ‘voluntary standards,’ these so-called principles will almost surely be enforced as though they are laws by unelected federal regulators and Treasury officials who continue to overreach.”
“It’s clear Treasury’s intention is to direct credit to politically favored activities in order to appease far-left climate activists,” Chairman McHenry said, promising that his committee “will hold the Administration accountable” for using the Treasury Department to coerce compliance with its political goals.
Indeed, Treasury’s nine “principles” encourage financial institutions to invest in, and provide credit to, companies that comply with radical leftist Environmental, Social, and Governance (ESG) ideology - while shunning those (such as producer of traditional energy) that don’t:
- “Financial institutions should assess client and portfolio company alignment to their (i.e., financial institutions’) targets and to limiting the increase in the global average temperature to 1.5°C.” (Principle 4).
- “Financial institutions should align engagement practices — with clients, portfolio companies, and other stakeholders — to their commitments.” (Principle 5)
- “Incorporating net-zero objectives into resource allocation and business planning…Financial institutions should develop and execute an implementation strategy that integrates the goals of their commitments into relevant aspects of their businesses and operating procedures.” (Principle 6)
- “Financial institutions should establish robust governance processes to provide oversight of the implementation of their commitments.” (Principle 7)
- “Financial institutions should, in the context of activities associated with their net-zero transition plans, account for environmental justice and environmental impacts, where applicable.” (Principle 8)
The Treasury Department's advice tells financial institutions to “reallocate financing, investment, and advisory services away from clients and portfolio companies that over time act in ways inconsistent with a financial institution’s commitment and transition plan. In those cases, such reallocation can reduce a financial institution’s exposure to companies facing high transition risk.”
Furthermore, financial institutions should be prepared to defend their business decisions, Treasury says:
“An institution providing transition finance should be able to explain how its financing results in reductions of its client’s or portfolio company’s emissions.
“For example, a financial institution could provide capital to a steel company that is acquiring lower-emitting electric arc furnaces. An institution providing transition finance should be able to explain how its financing results in reductions of its client’s or portfolio company’s emissions.”
The Treasury Department’s ESG advocacy doesn’t stop with financial institutions, however.
On Tuesday, the Treasury Department convened a meeting of the Treasury Advisory Committee on Racial Equity, whose members advise Treasury Department leadership on “economic and fairness” initiatives – such as “rebalancing enforcement priorities toward high-income, high-wealth individuals, large corporations, and complex partnerships.”
Treasury Secretary Janet Yellen and Climate Counselor Ethan Zindler also met with leadership from philanthropies in order to counsel them on how to skew their donations and grants to favor those who support green energy and seek to eliminate carbon emissions.
Editor's Note: This piece was originally published on MRCTV.org.