Kentucky banking trade group sues State AG over ESG policy demands

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The Kentucky Bankers Association sued state Attorney General Daniel Cameron in county court this month for allegedly exceeding his legal authority by asking the nation’s six largest banks to produce documents and other information about their environmental, social and governance (ESG) lending practices. .

Cameron is one of more than a dozen Republican state attorneys general who have sent Civil Inquiry Requests (CIDs) to JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs and Morgan Stanley asking for information about their participation in the UN-supported network. – Zero Banking Alliance.

The demands piggyback on actions this summer from two states: Texas demanded in August that state pension funds divest from asset manager BlackRock and several foreign banks seen as “boycotting” the financial sector. fossil fuels unless companies defend their policies to the satisfaction of the state. .

A month earlier, West Virginia announced it would stop awarding new state business to BlackRock, JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley following corporate decisions to cut funding for coal companies. .

Under Kentucky law, the state’s Department of Financial Institutions — not the attorney general — can regulate and demand information from banks, the trade association, representing 150 banks doing business in Kentucky, said claimed in his court record.

The attorney general can issue requests for investigation under the state’s consumer protection law, but Cameron isn’t investigating anything illegal under that law — and is seeking information outside of it. state, the association said.

Calling Cameron’s demands “astonishingly broad and disturbingly broad,” the association said the CIDs “clearly create unreasonable charges and government investigations against companies and people who might worry, discuss or even think about the change. global climate or environmental activities,” according to the Louisville Courier Journal.

Moreover, according to the association, Cameron’s efforts “waste and waste taxpayer dollars.”

Cameron’s office has filed paperwork asking that the case be transferred to federal court.

The trade association said participating banks were heavily involved in relief and investment efforts following tornadoes that tore through the western part of the state in 2021 and flooding that hit counties across the state. is this year, adding that many have wondered if the weather events are “exacerbated”. by climate change.

One of the concerns raised by the association is whether the information Cameron seeks includes “relevant loans that involve repayment risks that may include the borrower’s ‘ESG factors’,” according to the filing.

The trade association, in a second count, said Cameron violated the banks’ rights to free speech and association because “the very existence of CIDs…chills the plaintiffs’ right to think , to speak and associate freely and without unwarranted governmental intrusion or criticism”.

“In effect, CIDs create a system of ongoing state surveillance over a recipient’s communications and activities and with the individuals with whom a recipient interacts,” the filing states, according to the Courier Journal.

The filing also contains a third count – claiming Cameron violated a state Senate bill, passed this year, that tasks the state treasurer with compiling a list of companies deemed to be boycotting certain forms of energy. Under this measure, the Attorney General can only make requests after a civil action has been brought against a bank.

Cameron, meanwhile, has pushed ahead with his campaign to stamp out “woke” ESG politics. His office on Monday announced a new investigation into the ESG investment practices of State Street and Vanguard, which received CIDs linked to their membership in the Glasgow Financial Alliance for Net Zero, Climate 100+ and Net Zero Asset Managers.

Cameron and State Treasurer Allison Ball last month asked the Kentucky Teachers’ Retirement System and the Kentucky Public Pension Authority to detail the role ESG investing practices play in their management of pension plans. state public pensions.

Of the CID’s multistate effort, Cameron wrote, in a statement last month, “We have joined this investigation to ensure that Kentucky companies that reject the United States’ anti-fossil fuel climate program Biden administration have the same financial freedoms as those who accept it.”

The Kentucky General Assembly this year passed a bill prohibiting public funds from going to any company that boycotts energy companies based on fossil fuels.

Cameron is seeking the Republican gubernatorial nomination next year.

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