By Ken LaRoe, Climate First Bank
While imperfect, America’s free enterprise system has powered a strong, innovative, formerly best-in-the-world economy. Consumers have a greater voice — determining which companies fail or succeed based on their purchase decisions. Unfortunately, this American recipe for economic resilience and growth is being targeted in Florida by Gov. Ron DeSantis and his Republican cohorts – jeopardizing free market blessings for obvious political theater.
This session has seen attacks on ESG principles. This anti-capitalist legislation is part of an initiative to “protect” Floridians from “ESG financial fraud.” But DeSantis and lawmakers aren’t protecting Floridians from anything, except from responsible companies that protect the environment and make positive contributions to the communities they serve. Instead, our leaders are eliminating the freedom of free market choice.
ESG, or “environmental, social, governance,” is a component of corporate social responsibility. While corporate social responsibility is how you act, ESG is how you measure how you act. It factors into a business’s decisions and enhances its transparency with its customers and stakeholders. My community bank, Climate First Bank, was built with corporate social responsibility and ESG in its DNA as part of its originally established business plan. It was approved by the FDIC and the Florida Office of Financial Regulation.
Last year we published our first annual Impact Report publicly outlining our efforts toward environmental protection and social causes. In terms of governance, Climate First Bank has a “contra-mission exclusionary list” to ensure it stays true to our founding principles and aligns with stakeholders’ expectations. This list outlines extractive and exploitative industries the bank may never do business with, including weapons, dirty energy (coal, nuclear, fracking, etc.), incarceration and punishment, and more. With 60 of the world’s largest banks leveraging consumer deposits to pour $673 billion into fossil fuels, more and more consumers are turning to ESG-backed institutions like ours to prevent contributing to the climate crisis and other social injustices.
But DeSantis wants to weaponize ESG and dictate which industries we choose to do business with. The recently passed legislation punishes us for denying loans and deposits based on violations of our “contra mission exclusionary list.” Climate First Bank, a community bank specializing in solar energy, will now be put in a position where loans are expected to be given to industries like fracking. At the risk of penalties and violations, Climate First Bank will be forced to make loans to dying, non-viable dirty industries that not only greatly increase risk but also violate our overall mission as a company and break the promises made to our stakeholders. Moreover, it’s an unsafe and unsound practice for us to bank industries or businesses we know nothing about.
Across America, there has been a focus on how businesses can administer an effective ESG plan. The business benefits are astronomical – primarily because it aligns with socially conscious consumers. It’s a group that’s growing daily; 54% of consumers surveyed in 2021 said they were more likely to be loyal to a brand with sustainable/ethical business practices. Consumers are voting with their wallets and aiming to make the world a better place through their loyalty to ESG-focused companies. When it comes down to risk management, cost reduction, care for the environment, and adapting to the ever-changing market, following an ESG plan is the answer.
From day one, Climate First Bank is focused on making a positive difference on the world. As a Floridian with an unwavering belief in capitalism, democracy and patriotism, I believe it’s our duty to take care of the communities, people, wildlife, waterways, and renewable resources surrounding us.
We work with businesses and consumers throughout Florida who are also passionate about ESG and doing good. This is something we continue to see a rising interest in. There is no doubt in my mind that this legislation targeting “woke capital” will have a deeply detrimental impact on Florida residents, businesses and economy. ESG’s goal is to foster positive change and longevity. By punishing people and businesses trying to do good like drive against climate change, DeSantis is condemning us to a toxic future where corporations continue to operate at the expense of our communities and environment.
Ken LaRoe is a leader in the field of ethical banking, and founder of Florida Choice Bank and First GREEN Bank He then created Climate First Bank in 2021 with a mission to drawdown atmospheric carbon dioxide by investing in and accelerating the clean energy transition.