New York City, US. The recent pushbacks on ESG in the US have had an impact on financial market participants and whilst it would be "lovely to ignore it, we have to take it seriously", according to Ivan Frishberg, chief sustainability officer at Amalgamated Bank.
Speaking at the Sustainable Investment Forum North America 2022 yesterday (22 September), Frishberg compared the pushback to climate denial, arguing that it was a "denial of capitalism".
"We kind of killed climate denial in all but the most extreme elements but this is fundamentally denial of capitalism," he said. "When you tell an asset manager: 'you can't look at data and assess risk in the decisions you make' - That's a denial of capitalism. When you tell a bank, like the Trump administration tried to do, that 'you have to lend to fossil fuel companies in every state in every market' - That's a denial of capitalism. When you tell us, as a bank, that we can't use the same tools we use and are regulated to use to stop money laundering and human trafficking, to also stop mass shootings - That's a denial of capitalism."
Also on the panel, David Carlin, TCFD lead at the UNEP FI, said he struggled to talk about this issue because, for him, it is noise and giving it more airtime is not desirable.
"This is a distraction," he said. "And truth be told, there's a direction where we're going globally, that's the direction the markets, stakeholders and governments, that are attuned to this, are going. Those kind of standing along the way, are going to find themselves further and further out of the mainstream. And also further and further out of the serious conversation that investors and stakeholders are actually having about these issues of risk and return."
But Frishberg said "this is an effort by a set of status quo and extreme elements to chill those efforts [on ESG], and it is having an impact".
"I'm on the steering group for the Net-Zero Banking Alliance," he continued. "And I will tell you, you can feel the pressure. You can feel it on companies, they are they are at risk of losing business in some of these states. It would be lovely to ignore it, but we have to take it seriously and most importantly for the financial sector, we have to push back. If we don't push back, they're going to own the debt."
US SEC climate disclosures proposals
The panel was originally on the US SEC climate disclosures proposals, which some have argued is beyond the regulator's scope.
The SEC replied to critics arguing it wasn't proposing an environmental rule to reduce greenhouse gas emissions but rather to create more transparency for investors.
Carlin said the proposed requirements were a necessary step as it will set a level playing field in what companies disclose and fill in some of the holes that make comparisons challenging.
"Investors are definitely gaining the knowledge to use this information effectively," he said. "But they have to continue to build that into their practices. If this is simply about reporting on a second order level, that isn't going to have that transformative and catalytic effect."
Bob Hinkle, president and CEO at Metrus Energy, echoed the comments saying "disclosure in and of itself isn't a panacea but it's a critical, foundational step forward".
Although the SEC rule doesn't mandate for GHG reduction, he continued, it's going to put a spotlight on what companies are doing which in turn could lead to reduction actions.