South Carolina Bill Seeks to Shield Agriculture Firms From ESG Requirements
The Farmers Protection Act is the latest pushback by Republicans to prevent financial firms from applying environmental, social, and governance standards.
A bill working its way through the South Carolina state legislature aims to prevent financial firms from applying environmental, social, and governance standards to agricultural companies, as the Republican backlash against ESG rolls on.
The proposed legislation, H. 5169, calls for the enactment of the “Farmers Protection Act,” which aims to shield the state’s agricultural industry from the demands of “ESG activists,” which it claims “may put small struggling farmers out of business.”
Among the “ESG activists” cited in the text of the legislation are the United Nations Environment Program and the Net-Zero Banking Alliance. The bill notes that members of the Net-Zero Banking Alliance, which include America’s six biggest banks, are expected to set agricultural targets for their portfolios.
“A financial institution may not discriminate in the provision of financial services to an agriculture producer based, in whole or in part, upon the agriculture producer’s greenhouse gas emissions, use of fossil-fuel derived fertilizer, or use of fossil-fuel powered machinery,” the bill states. It adds that “denial or restriction” of financial services to agricultural firms must be “based solely on documented financial considerations, and not on any ESG commitment.”
At the federal level, the Securities and Exchange Commission in March approved rules requiring companies that sell stock or bonds to disclose certain climate-related information about their businesses and supply chains. After the rules were approved, opponents sued, and the SEC stayed the rules as the litigation continues.
The South Carolina bill argues that the ESG requirements sought by financial firms from the agriculture industry would place too great a financial burden on farmers. It claims the state’s farmers would be required to spend too much time and money measuring, reporting, and reducing their emissions, in addition to spending even greater sums on electric charging infrastructure to meet demands for zero emissions on farm machinery. It also blames the UNEP’s demands for reduced use of nitrogen fertilizer for helping to get Sri Lanka to stop using chemical fertilizer, which it claims led “to a devastating crop yield decrease, skyrocketing food prices, and an economic and humanitarian disaster.”
South Carolina is among several Republican-controlled legislatures that have passed laws in recent years prohibiting state entities from doing business with firms—including banks and asset managers—the states believe boycott energy companies. In 2023, anti-ESG bills were introduced in 46 states, according to government relations firm MultiState. This includes bills that were passed in Alabama, Arkansas, Indiana, Kansas, Missouri, Montana, North Carolina, New Hampshire, Texas, and Utah.
MultiState said in its 2023 state legislative recap that no issue reflects America’s increasing political polarization “more obviously” than ESG legislation in the states, noting that Republican and Democrat lawmakers have fundamental philosophical differences on the topic. It also noted that in 2023 Republican states have had “much more success” enacting anti-ESG legislation than Democrat-controlled states had enacting pro-ESG legislation.
“In an already polarized environment, we are likely to see both parties double down on their political agendas throughout the states,” the firm said in its recap, adding that social and cultural politics will likely dominate the 2024 presidential election. “Knowing this, we should expect to see another year with a large volume of pro- and anti-ESG legislation introduced throughout the country.”
The proposed bill will next be reviewed by South Carolina’s senate.
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