Legislation in the South Carolina House of Representatives, the Farmer Protection Act, which would combat environmental, social and governance (ESG) scoring systems and ensure South Carolina’s farmers are not discriminated against by financial institutions based on environmental policy.
Environmental, social and governance (ESG) scores are essentially a risk assessment mechanism increasingly being used by investment firms and financial institutions that forces companies and agricultural concerns to focus upon politically motivated, subjective goals which often run counter to their financial interests and the interests of their customers. Companies are graded on these mandated commitments to promote, for example, climate or social justice objectives. Those that score poorly are punished by divestment, reduced access to credit and capital, and a refusal from state and municipal governments to contract with them.
Many of ESG’s metrics, primarily those related to imposing environmental controls, are directly linked to the agricultural industry and food production. Examples of some of these metrics include: “Paris-aligned GHG emissions targets,” “Impact of GHG [greenhouse gas] emissions,” “Land use and ecological sensitivity,” “Impact of air pollution,” “Impact of freshwater consumption and withdrawal,” “Impact of solid waste disposal,” and “Nutrients”— which, despite its innocuous-sounding name, is a metric that forces companies to estimate the “metric tonnes of nitrogen, phosphorous, and potassium in fertilizer consumed.” Farmers and food producers use chemical fertilizers and pesticides for crop growth, in addition to producing waste biproducts, consuming substantial quantities of water, using vast swathes of land, and releasing what climate alarmists claim to be planet-ending carbon dioxide emissions.
The world has already experienced adverse food supply shocks caused directly and/or indirectly by ESG mandates, with the most prevalent occurring in Sri Lanka, where a regulatory ban on chemical fertilizers cut crop production nearly in half and resulted in societal upheaval that toppled the Sri Lankan government. Other disruptions in food supply related to ESG have occurred throughout Europe— especially in the Netherlands—as well as in Canada and the United States.
In the United States in particular, investment giants and banking behemoths have signed on to international agreements such as the United Nations-led Glasgow Financial Alliance for NetZero (GFANZ), a global coalition dedicated to climate change mitigation efforts organized under the auspices of the United Nations. GFANZ consists of approximately 450 banks, investors, and insurance companies, whose members control $130 trillion in assets. Through GFANZ and its industry subgroups, such as the Net-Zero Asset Managers Initiative and the Net-Zero Banking alliance—which controls 41 percent of global banking assets—the world’s biggest investors and banks have agreed to set United Nations-approved emissions targets for their agricultural customers by 2024.
Similar to the disastrous policies in Sri Lanka and elsewhere, nitrogen-based fertilizer use is being heavily targeted in the United States, and farmers are being urged to electrify their equipment as well as curtail meat and dairy production in order to create products that have “lower carbon-dioxide footprints,” to name only a few examples. Farmers will soon be under enormous pressure to undertake these “voluntary” changes and reduce their emissions or risk being frozen out of bank financing.
A recently released report from Ohio’s Buckeye Institute has found that operating expenses for farmers under an ESG reporting system would increase by 34 percent, leading to more expensive groceries. Items like American cheese (79 percent), beef (70 percent), strawberries (47 percent), and chicken (39 percent), just to name a few examples, would increase significantly. Overall, the report estimates a 15 percent total increase in household grocery bills if ESG scoring is allowed to be implemented.
The FPA would prohibit banks from restricting services to farmers “based, in whole or in part, upon the farmer’s greenhouse gas emissions, use of fossil-fuel derived fertilizer, or use of fossil-fuel powered machinery.” as well as empower the Commissioner of Agriculture and Attorney General to investigate and penalize violations and set penalties for those violations. Further, “if a financial institution has made any ESG commitment related to agriculture, there shall be a rebuttable presumption that the institution’s denial or restriction of a financial service to a farmer violates” the terms of the FPA. A bank may overcome the rebuttable presumption only by “demonstrating that its denial or restriction of a financial service was based solely on documented financial considerations, and not on any ESG commitment.”
These are all common-sense provisions that will go far to protecting Palmetto State farmers from discrimination while also protecting the wallets and pocketbooks of all South Carolinians and ensuring that radical activists, many from outside of this state and outside of this country, from controlling the means of production and curtailing the freedoms of each and every citizen of this state.
The following documents provide more information about ESG.
Environmental, Social, and Governance (ESG) Scores: A Threat to Individual Liberty, Free Markets, and the U.S. Economy
https://heartland.org/wp-content/uploads/2023/04/2023-ESG-ReportvWeb-2.pdf
This policy paper by Heartland Institute research fellow Jack McPherrin provides a comprehensive overview of ESG and proposes specific policy recommendations to counteract ESG’s insidious influence.
ESG: A Simple Breakdown of its Components
https://heartland.org/wp-content/uploads/2022/12/PolicyTipSheetESG1.pdf
This Heartland Institute Policy Tip Sheet provides a brief description of each of the three categories comprising a company’s risk assessment based upon ESG metrics, using one of the most commonly used ESG frameworks developed by the International Business Council.
ESG: Financial Discrimination
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG8src.pdf
This Heartland Institute Policy Tip Sheet discusses financial institutions’ discriminatory practices against consumers, and explains proposed solutions to the problem.
ESG: The Banking Industry
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG7src.pdf
This Heartland Institute Policy Tip Sheet briefly summarizes how the banking industry has used its coercive market power to weaponize ESG compliance.
ESG: Central Bank Digital Currencies
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG6.pdf
This Heartland Institute Policy Tip Sheet provides a brief summary of central bank digital currencies (CBDCs) and how they can be wielded against society to enforce ESG compliance.
ESG: Negative Effects on Food Supply and Agriculture
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG5.pdf
This Heartland Institute Policy Tip Sheet provides a brief summary of how ESG is being weaponized against farmers, food production, and the agricultural industry as a whole.
ESG: The Effects Upon Free Markets
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG3.pdf
This Heartland Institute Policy Tip Sheet offers a brief description of how ESG systems fundamentally alter free markets and the natural equilibrium of supply and demand.
ESG: The Role of the U.S. Securities and Exchange Commission
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG2.pdf
This Heartland Institute Policy Tip Sheet offers a brief description of the role of the U.S. Securities and Exchange Commission (SEC) in coercing companies into ESG compliance.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Heartland’s Government Relations department, at [email protected] or 312/377-4000.
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
Jack McPherrin is The Heartland Institute’s research editor, as well as a research fellow within Heartland’s Socialism Research Center.
