Q&A of the Day – Which Florida Banks Don’t Adhere to ESG Standards?
Each day I feature a listener question sent by one of these methods.
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Today’s Entry: I read your articles but like every other article, no one will highlight what bank doesn’t use ESG. As a result, in trying to find a bank that doesn’t go with the orthodoxy, it seems impossible to find one, which leaves consumers in the dark. It would be great if there was an easily accessible list. Thank you.
Bottom Line: I most recently covered this topic in January in my story: Finding Banks That Don’t Use ESG Standards. In that story I highlighted these knowns at the time: A KPMG study found 68% of all banks had incorporated ESG criteria into their policies including lending standards. Which obviously means that your average bank has used ESG, or Environmental, Social and Governance standards as part of their operations process. I also offered this as general guidance for those seeking out non-ESG oriented banks: Which banks are the most likely to be part of the 32% holding out? Smaller banks. regional and local banks. There are far too many to attempt to name names but if you’re concerned with this issue don’t be afraid to ask the question of your bank, or a bank you’re considering using. That takes us to today’s note which seeks a list of banks.
As noted, creating a list of banks bucking the ESG trend would result in far too many to name. As of January, based on the estimates from the related KPMG study, there were approximately 1,550 banks operating in the US which didn’t use ESG standards. Attempting to pull together that type of list would be disproportionately laborious – in addition to potentially misleading. Creating a list of non-ESG banks would require constant research and dynamic updating. Banks regularly consolidate, new banks emerge, and some cease operations. Additionally, a bank could choose to operate differently tomorrow. That’s why I haven’t produced a specific list of non-ESG banks and also likely why others haven’t produced them either. With that said, there’s been a significant change in Florida since January. As of July 1st, Florida’s Government and Corporate Activism Act became law.
Florida’s new law contains this legal summary:
Requires financial institutions such as banks and credit unions, consumer finance lenders, and money services businesses to make decisions about the provision or denial of services based on an analysis of risk factors unique to each customer, and prohibits them from engaging in any “unsafe and unsound practice.” The bill specifies that it is an “unsafe or unsound practice” to deny or cancel services to a person, or discriminate against a person in making available such services or in the terms or conditions of such services, on the basis of:
- The person’s political opinions, speech, or affiliations.
- Except for such entities that claim a religious purpose in certain circumstances, the person’s religious beliefs, exercise, or affiliations.
- Any factor that is not a quantitative, impartial, and risk-based standard.
- The use of any rating, scoring, analysis, tabulation, or action that considers a “social credit score” based on factors, including, but not limited to:
- The person’s political opinions, speech, or affiliations.
- The person’s religious beliefs, religious exercise, or religious affiliations.
- The person’s lawful ownership of a firearm.
- The person’s engagement in the lawful manufacture, distribution, sale, purchase, or use of firearms or ammunition.
- The person’s engagement in the exploration, production, utilization, transportation, sale, or manufacture of fossil fuel-based energy, timber, mining, or agriculture.
- The person's support of the state or federal government in combatting illegal immigration, drug trafficking, or human trafficking.
- The person’s engagement with, facilitation of, employment by, support of, business relationship with, representation of, or advocacy for any person described by the aforementioned factors.
- The person’s failure to meet or commit to meet, or expected failure to meet, any of the following as long as such person is in compliance with applicable state or federal law:
- Environmental standards including emissions standards, benchmarks, requirements, or disclosures.
- Social governance standards, benchmarks, or requirements, including (but not limited to) environmental and social justice.
- Corporate board or company employment composition standards, benchmarks, or disclosures based on characteristics protected under the Florida Civil Rights Act of 1992.
- Policies or procedures requiring or encouraging employee participation in social justice programing, including but not limited to diversity, equity, and inclusion training.
As you can tell it’s comprehensive and explicitly bans, in very specific terms, use of ESG in business practices within this state. So about now you might be wondering if that means all banks in Florida are out of the ESG business? The answer is no. Now here’s the key – it’s the banks this applies to.
The extent to which the state of Florida can regulate banks, is with banks that specifically fall under the state’s charter. Banks are chartered at either the state or the federal level. Florida chartered banks are regulated by the Florida Office of Financial Regulation which is the enforcer of this law. Nationally chartered banks are unimpacted by it. And with that I am able to present to you a list, complied by Florida’s Office of Financial Regulation, of state charted banks and credit unions which are beholden to Florida’s law.