On the eve of Earth Day, 45 members of the U.S. House of Representatives delivered a letter to Special Presidential Envoy for Climate Change John Kerry accusing him of “abuse of power” for leaning on banks and other financial institutions to deny funding for fossil fuel-related entities in the name of fighting climate change.
“We write to you to express concern with your decision, as reported in the press, to pressure U.S. banks to make radical, overly prescriptive commitments related to climate change that may not be in the best interest of their businesses, shareholders, employees or customers.1 Such pressure from a senior Administration official is a blatant abuse of power,” the letter said. “Your actions, and the broader actions of the Biden Administration on financial regulation, threaten to compromise the competitiveness of American financial institutions, ignore market demand in energy consumption, increase prices for consumers and kill American jobs.”
The letter says, last year, 47 Republicans sent a letter to Federal Reserve Chairman Jerome Powell and Vice Chairman of Supervision Randal Quarles that outlined some of the methodological challenges of injecting climate change into financial supervision.
“In that letter, we urged the Fed to take a measured, thoughtful and data-driven approach to their study of this topic, and not to be swayed by political forces or the ill-conceived actions of peer regulators in foreign jurisdictions,” the letter said. A “lack of historical data on the relationship between changing weather patterns and financial stress preclude inclusion of loosely defined climate change metrics in bank supervision or disclosure.”
The letter noted that the Biden administration claimed climate change has led to an increase in costs to fight the damage from natural disasters.
“This analysis ignores other potential contributors, such as poor zoning standards or increases in population density,” the letter said. “Climate change is a multi-decade phenomenon and the available data of its financial impacts have gaps and are plagued by a disqualifying level of subjectivity.”
The letter said the same “methodological concerns” apply to the Biden administration’s “heavy-handed efforts to incorporate climate change into financial supervision, or pressure banks to adopt the administration’s climate change principles.”
The letter said senior Biden administration officials, like Kerry, are seeking to pressure the financial services industry to “align with partisan environmental goals.”
“Behind the scenes pressure to leverage these banks’ public commitments to advance a far-left environmental agenda is unwelcome and contrary to American democratic values,” the letter said.
The letter also expressed concern about a forthcoming President Joe Biden executive order that “will require additional disclosure of climate change risks by financial institutions.”
“You noted that the executive order will, “change allocation of capital,” and that “suddenly people are going to be making evaluations considering long-term risk to the investment based on the climate crisis.”
The letter noted that publicly traded banks, insurance companies, and other financial institutions already are required by law to disclose material risks, and regulated depository institutions “already have extensive risk assessment requirements under current regulation and accounting standards. Given these obligations, any material risk to the financial institutions is already disclosed to investors, the public and regulators.”
“Pressure on banks by public officials to cut off financing to fossil energy, or otherwise limit their ability to extend credit to American energy producers or traditional utilities, is political rhetoric masquerading as risk management,” the letter said. “Politicizing access to capital and choking off funding to industries that millions of Americans rely on is unacceptable, especially in times of economic and financial uncertainty.”
“This will kill jobs, increase prices, and cede U.S. competitiveness to countries like China and Russia,” the letter said.
The letter also cites the government’s own data.
“The U.S. Energy Information Administration (EIA) 2021 Annual Energy Outlook, published under the Biden administration, predicts that by 2050 oil and natural gas consumption will increase and still be the leading forms of energy consumed at approximately 40 and 37 quadrillion British Thermal Units (BTUs), respectively,” the letter says.
“While renewable energy consumption is expected to increase, its availability will not be sufficient to sustain the energy needs of everyday Americans,” the letter said.
“The government’s role is not to shift consumption away from fossil energy in direct contradiction to market forces and consumer demand, especially through a behind the scenes pressure campaign against American business leaders,” the letter concluded.
“American banks should not be exploited as political pawns and bullied into being enlisted as instruments of the Biden Administration’s misguided and controversial climate policies,” the letter said.
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