Last month, I was pleased to moderate a panel in Anchorage, Alaska with other elected officials on the topic of ESG (environmental, social and governance) at the State Financial Officers Foundation conference. We got deep in the weeds talking about the impact of ESG policies on pension funds, businesses and individuals who were victims of political de-banking. We've discussed this topic before at other conferences, but this one had a new twist, as the impact of ESG on agriculture was also thrown into the discussion mix. But let's back up for a minute. Where did ESG start, and what exactly is it?
The genesis of ESG was in January 2004, when then-Secretary General of the United Nations Kofi Annan invited the CEOs of 50 large companies to participate in a joint initiative to integrate ESG into capital markets. Shortly thereafter, asset managers who previously sought to maximize returns on investment and assess financial risks began redefining "risk" to include climate and social change.
Ratings companies such as Sustainalytics and MSCI began issuing woke report cards for thousands of different companies, pressuring them to change their behavior to achieve climate-related goals. The environmental component of ESG sought to measure a company's commitment to fighting climate change by tying private industry to international sustainable development goals and treatises.
Companies were also pressured to achieve social goals such as LGBTQ+ initiatives, gender reassignment surgery, social justice, company reimbursement for out-of-state abortions, and "assault" weapons bans. The Governance portion of ESG rates companies based on board diversity, equity and inclusion and aspires to broaden corporate purpose from shareholder profits to "stakeholder impacts." (In other words, people who don't even own your company get a say in how you run it because they are "community stakeholders.”)
The Social and Governance portions are bad enough, but it is the Environmental component of ESG that is so dangerous to Alabama agriculture because government climate-control policies contained in the Paris Climate Accords and the Inflation Reduction Act will force huge increases in costs on our farmers—increases that will be passed along to consumers at the grocery store. In fact, the Buckeye Institute put out a report in February that outlines how farmers will see their operational costs rise by 34% because of net-zero ESG policies. They estimated that would increase the grocery bill for a family of four by $1300/year, including 70% increases in the price of beef, 39% in chicken, and 36% for eggs.
Texas Agricultural Commissioner Sid Miller joined 11 other state agriculture leaders to co-sign a letter that addressed this very issue, stating: "Imposing costly ESG requirements on America's Farmers and ranchers will have a devastating impact on U.S. agriculture and world food security." In Alabama, this won't just hurt farmers, it'll affect poultry and egg industry and the forestry industry as well.
The political left in this country has no problem with that, and the Squad members like AOC happily promote these ESG policies out to their base during the election cycle. These politicians are mostly from the east and west coasts big cities and have never set foot on a farm. They eat Impossible Whoppers and fly on their private jets to D.C. to vote on policies that will decimate the farms in "flyover country."
A commitment to net-zero emissions would also necessitate a move away from fossil fuels—a move technology has not yet made possible. The restrictions they place on oil and coal have increased the cost of fuel and raised everyone's utility bills.
But it's not just southern rednecks in gas-guzzling pickup trucks that are the target… that's so 2010! Anything that stands in the way of climate goals must be eliminated by 2050. The livestock industry is responsible for 14.5% of global greenhouse gas emissions. Therefore, according to the liberals, you shouldn't eat meat (unless it's lab-grown meat, of course.) I've seen proposals that the United States needs to reduce meat consumption by 82% if we are to achieve our climate commitments. Ideas like these would put the livestock industry out to pasture in Alabama.
Beyond livestock, Alabama farmers have more still to fear from these climate proposals. After all, diesel tractors are a huge emitter of CO2 and must be replaced with electric tractors. Do powerful enough electric tractors exist to replace diesel tractors? Of course not, but we can't let that stop us! Perhaps farmers could plow half a field and then take a break while their tractor batteries recharge with the solar panels they were also forced to install.
On a serious note, obviously these ideas are not going to be popular with farmers, so how are any of these policies ever going to be implemented? The answer is simple: through coercion! The climate alarmists have realized that they can force net-zero on the agriculture industry by the power of the purse—in this case, the big banks. One hundred climate groups pressured JP Morgan and other banks not to lend to farmers who don't agree to meet climate goals. Imagine not being able to get a loan to buy land, plant a crop, or buy a tractor unless you agree to net-zero emissions standards by 2050.
Why can't they just get another bank? Because the Net-Zero banking alliance includes Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo. There will likely be a simultaneous effort to de-bank farmers, just as the big banks have done to gun retailers, religious groups, and conservative political organizations. Outside of a community bank, farmers will have no hope if these policies move forward.
Some farmers will be forced to make an impossible choice — get the loan by agreeing to net-zero by 2050 (which is impossible without shutting down the farm and getting rid of the livestock), which will spell their ultimate destruction, or go without the piece of equipment they need to purchase today to keep their farm up and running.
Of course, these ideas are all "udder" nonsense (forgive me, I couldn't resist), but in the religion of climate worship, asking obvious questions like, "What are we going to eat once we've destroyed the agriculture industry?" are not allowed. After all, climate change is an existential threat to the modern world, and climate goals must be achieved at all costs!
The truth is Alabama agriculture can't afford ESG mandates. We need Alabama elected officials at all levels of government to fight back on these ESG proposals. To begin with, we must protect Alabama farmers from being de-banked for not committing to net-zero emissions by 2050. We must defeat any efforts to impose a "meat tax," as other countries such as Denmark and Sweden have already debated to reduce meat consumption. We must also resist any effort to force our farmers to use electric equipment.
If left unchecked, this move towards ESG will spike prices in the grocery store and double the price of a hamburger at McDonalds. For Alabama farmers and consumers alike, that's a major pain in the buns.
Andrew Sorrell is the Alabama State Auditor.
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News.
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