Testimony Before the South Carolina Senate Agriculture and Natural Resources Committee Regarding H 5169
Tim Benson, Senior Policy Analyst
Heartland Impact
April 11, 2024
Chairman Climer and Members of the Committee:
Thank you for holding this hearing on H 5169, the Farmer Protection Act (FPA), which would combat environmental, social and governance (ESG) scoring systems and ensure South Carolina’s farmers are not discriminated against by financial institutions based on environmental policy.
Environmental, social and governance (ESG) scores are essentially a risk assessment mechanism increasingly being used by investment firms and financial institutions that forces companies and agricultural concerns to focus upon politically motivated, subjective goals which often run counter to their financial interests and the interests of their customers. Companies are graded on these mandated commitments to promote, for example, climate or social justice objectives. Those that score poorly are punished by divestment, reduced access to credit and capital, and a refusal from state and municipal governments to contract with them.
Many of ESG’s metrics, primarily those related to imposing environmental controls, are directly linked to the agricultural industry and food production. Examples of some of these metrics include: “Paris-aligned GHG emissions targets,” “Impact of GHG [greenhouse gas] emissions,” “Land use and ecological sensitivity,” “Impact of air pollution,” “Impact of freshwater consumption and withdrawal,” “Impact of solid waste disposal,” and “Nutrients”— which, despite its innocuous-sounding name, is a metric that forces companies to estimate the “metric tonnes of nitrogen, phosphorous, and potassium in fertilizer consumed.”[i] Farmers and food producers use chemical fertilizers and pesticides for crop growth, in addition to producing waste biproducts, consuming substantial quantities of water, using vast swathes of land, and releasing what climate alarmists claim to be planet-ending carbon dioxide emissions.
The world has already experienced adverse food supply shocks caused directly and/or indirectly by ESG mandates, with the most prevalent occurring in Sri Lanka, where a regulatory ban on chemical fertilizers cut crop production nearly in half and resulted in societal upheaval that toppled the Sri Lankan government. Other disruptions in food supply related to ESG have occurred throughout Europe— especially in the Netherlands—as well as in Canada and the United States.[ii]
In the United States in particular, investment giants and banking behemoths have signed on to international agreements such as the United Nations-led Glasgow Financial Alliance for NetZero (GFANZ), a global coalition dedicated to climate change mitigation efforts organized under the auspices of the United Nations. GFANZ consists of approximately 450 banks, investors, and insurance companies, whose members control $130 trillion in assets.[iii] Through GFANZ and its industry subgroups, such as the Net-Zero Asset Managers Initiative and the Net-Zero Banking alliance—which controls 41 percent of global banking assets[iv]—the world’s biggest investors and banks have agreed to set United Nations-approved emissions targets for their agricultural customers by 2024.
Similar to the disastrous policies in Sri Lanka and elsewhere, nitrogen-based fertilizer use is being heavily targeted in the United States, and farmers are being urged to electrify their equipment as well as curtail meat and dairy production in order to create products that have “lower carbon-dioxide footprints,” to name only a few examples.[v] Farmers will soon be under enormous pressure to undertake these “voluntary” changes and reduce their emissions or risk being frozen out of bank financing.[vi]
A recently released report from Ohio’s Buckeye Institute has found that operating expenses for farmers under an ESG reporting system would increase by 34 percent, leading to more expensive groceries.[vii] Items like American cheese (79 percent), beef (70 percent), strawberries (47 percent), and chicken (39 percent), just to name a few examples, would increase significantly.[viii] Overall, the report estimates a 15 percent total increase in household grocery bills if ESG scoring is allowed to be implemented.[ix]
The FPA would prohibit banks from restricting services to farmers “based, in whole or in part, upon the farmer’s greenhouse gas emissions, use of fossil-fuel derived fertilizer, or use of fossil-fuel powered machinery.” as well as empower the Commissioner of Agriculture and Attorney General to investigate and penalize violations and set penalties for those violations. Further, “if a financial institution has made any ESG commitment related to agriculture, there shall be a rebuttable presumption that the institution’s denial or restriction of a financial service to a farmer violates” the terms of the FPA. A bank may overcome the rebuttable presumption only by “demonstrating that its denial or restriction of a financial service was based solely on documented financial considerations, and not on any ESG commitment.”
These are all common-sense provisions that will go far to protecting Palmetto State farmers from discrimination while also protecting the wallets and pocketbooks of all South Carolinians and ensuring that radical activists, many from outside of this state and outside of this country, from controlling the means of production and curtailing the freedoms of each and every citizen of this state.
Thank you for your time.
Heartland Impact can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Cameron Sholty, at csholty@heartlandimpact.org or 312/377-4000.
[i] Jonathan Walter et al., “Toward Common Metrics and Consistent Reporting of Sustainable Value Creation,” World Economic Forum, September, 2020, http://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_ Report_2020.pdf.
[ii] Jack McPherrin, “ESG: Negative Effects on Food Supply and Agriculture,” Policy Tip Sheet, The Heartland Institute, September 19, 2022, https://heartland.org/wp-content/uploads/2022/12/PolicyTipSheetESG5.pdf; Jack McPherrin, Environmental, Social, and Governance (ESG) Scores: A Threat to Individual Liberty, Free Markets, and the U.S. Economy, The Heartland Institute, April 26, 2023, https://heartland.org/wp-content/uploads/2023/04/2023-ESG-ReportvWeb-2.pdf.
[iii] Glasgow Financial Alliance for Net-Zero (GFANZ), “Amount of finance committed to achieving 1.5°C now at scale needed to deliver the transition,” November 3, 2021, https://www.gfanzero.com/press/amount-of-finance-committedto-achieving-1-5c-now-atscaleneeded-to-deliver-the-transition/.
[iv] United Nations Environment Programme, “Our Members: Net-Zero Banking Alliance,” last accessed March 3, 2024, https://www.unepfi.org/net-zero-banking/members/.
[v] Nako Kobayashi and Meryl Richards, “Global Sector Strategies: Recommended Investor Expectations for Food and Beverage,” Climate Action 100+, Ceres, and Principles for Responsible Investment, August 2021, https:// www.climateaction100.org/wp-content/uploads/2021/08/Global-Sector-Strategies-Food-and-Beverage-Ceres-PRIAugust-2021.pdf.
[vi] Jack McPherrin, “ESG: Financial Discrimination,” Policy Tip Sheet, The Heartland Institute, November 28, 2022, https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG8src.pdf.
[vii] Trevor W. Lewis & M. Ankith Reddy, Net Zero Climate Control Policies Will Fail the Farm, The Buckeye Institute, February 7, 2024, https://www.buckeyeinstitute.org/library/docLib/2024-02-07-Net-Zero-Climate-Control-Policies-Will-Fail-the-Farm-policy-report.pdf.
[viii] Ibid.
[ix] Ibid.
