For years now, red-state Attorneys General and the House Judiciary Committee have been putting pressure on banks to abandon climate goals. This strategy largely proved successful as bank climate pacts crumbled under pressure. Now, Democrats are taking their turn, as Senators Elizabeth Warren and Sheldon Whitehouse open a probe into bank climate rollbacks. Bloomberg reports:
“The probe seeks to examine the extent to which banks have allegedly caved in to pressure from Republicans and fossil-fuel interests to abandon their fiduciary duty to manage the financial risks that stem from climate change, according to letters sent to the banks that were reviewed by Bloomberg. In the letters, which are addressed to the chief executive officers of JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp. and Citigroup Inc., Whitehouse and Warren ask that the banks provide documents on the internal discussions that led the banks to leave climate alliances.”
This is a perfect example of the Catch-22 we’ve long discussed on PracticalESG.com. Companies will catch flak from one side or the other, regardless of their actions or inactions on climate issues. Anti-ESG is having its moment, and even the Warren/Whitehouse probe is likely toothless in the current political environment. However, when the political pendulum inevitably swings the other way, companies walking back climate commitments could face legal repercussions. Especially as rising temperatures drive severe weather events that result in public outcry. Climate risks manifest over the long term, and managing them requires us to play the long game.
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