Officials from the OCC, the FDIC, and the Fed, during testimony before a House subcommittee this week, emphasized that their actions regarding climate-related financial risk were not politically motivated—and that they are not in the business of telling banks which clients or sectors they can serve.
“The OCC does not and will not tell bankers what customers or legal businesses they may or may not bank,” Greg Coleman, OCC senior deputy comptroller for large bank supervision, told the House Subcommittee on Financial Institutions and Monetary Policy during a hearing titled “Climate-Risk: Are Financial Regulators Politically Independent?”
‘Politicized policymaking’? Rep. Andy Barr, R-Ky., who chairs the subcommittee, said the hearing was called to address what he described as a “lack of transparency” about climate risk management efforts by regulators. ESG-friendly policies, he claimed, represent “politicized policymaking” and are “an attempt to bankrupt the energy sector in our economy.”
Panelists repeatedly pushed back. “It’s our responsibility to make sure banks are considering the risks they face,” said Michael Gibson, director of supervision and regulation for the Fed’s board of governors. Gibson added that the Fed “is not a climate policymaker” and that its supervisory responsibilities “are focused on understanding and mitigating the potential impact of climate change on supervised banks.”
The hearing came just days after North Carolina became the latest in a growing number of states to pass anti-ESG legislation, which blocks state entities from considering environmental, social, and governance factors when making investment and employment decisions, as well as in awarding state contracts.
Fair access? Such bills are often labeled “fair access” rules, but another panelist—Sarah Benatar, treasurer of Arizona’s Coconino County—said they could potentially have the reverse effect.
“The introduction of anti-ESG legislation in states like Arizona will push numerous bidders out of the process entirely,” Benatar said. “At best, counties like ours would have one option to select from and would have to suffer higher costs.”
Barr was not swayed by the testimony, saying in his closing remarks that what he heard “perpetuates concerns that regulators focused on climate-related financial risk will in fact politicize credit allocation.”