Environmental or Destructive Policies: Investigation of 6 Prominent US Banks on ESG’s Investment

19 attorneys general across the US recently launched a formal investigation into six prominent US banks, citing legal concerns about ESG banks' investment and participation in a partnership with the United Nations aimed at combating carbon dioxide emissions.

The Epoch Times reached out to one of the AG mentioned above who said that banks appear to be colluding with the United Nations to destroy American companies and undermine American national interests.

In separate correspondence with another AG, the Epoch Times has learned that these environmental policies will send jobs to China due to Chinese government policies that allow coal-fired power plants to provide reliable forms of energy.

Furthermore, banks are required to provide details about their CEO's participation in UN initiatives and how these decisions are made. Banking actions related to Environmental, Social, and Governance (ESG) investment were also investigated.

The banks being investigated include Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo Citigroup.

 

US Companies in China

In an interview with Al-Estiklal, the expert on economics and researcher at Sabahattin Zaim Soumia Rahali said: "Monitoring companies and banks to ensure that they comply with their environmental obligations is essential. However, it is necessary to note that the countries that participate in the international agreements to limit global warming and that impose taxes and penalties on companies whose activities lead to compliance with climate agreements may lead to the flight of capital to countries that are more lenient with the matter.

She explained: "The United States, under the rule of Democrats, considers the climate as a priority and therefore enacts laws that control the activities of companies and banks. This makes many American companies decide to settle in China instead of the United States. This means fewer job opportunities in the US and undermines the wheel of the US economy.

She added, however, it should be noted that China has become a preferred destination for many companies not because of the climate but for many considerations.

The Fobes stated, "No one comes close in the developing world to China. And that is why US companies are so headstrong about staying there. Many companies that source from China, like Apple, are part of so-called ESG mutual funds that invest in what that acronym stands for: companies good on the environment, good on social responsibilities, and with good corporate governance."

 

Greenwashing

On November 3, The National website reported that climate activists locked themselves to an oil barrel with JP Morgan written on it at the main entrance to the bank's offices in Waterloo Street, Glasgow.

Gravestones with the words "Cop26 Failed" and "Cop27 Futile" were placed on the pavement, and activists hung up banners reading "JP Morgan – World's Dirtiest Bank" and "Greenwash won't wash."

Many companies resorted to misleading the public opinion about them by suggesting that they are more committed to protecting the environment than they really are, then their efforts to change reality are called Greenwashing, as this concept is used when trying to reveal the true commitment of a company towards the environment.

The phenomenon of greenwashing emerged when companies began to exaggerate their green commitments, i.e., their commitments and efforts to preserve the environment. Unfortunately, the phenomenon is common among a significant number of banks and companies today due to the great and increasing pressures exerted by the public and stakeholders on companies regarding their environmental records.

Andy Mason, Head of Governance Standards Oversight at Aberdeen Standard Investments, stresses that this trend is important to investors who focus on ESG standards, as determining the accuracy and validity of a company's sustainability information can be a serious challenge.

According to the Governance and Accountability Institute in New York, an estimated 90% of companies in the Fortune 500 are responsible for sustainability reporting, and there is a similar interest among companies in Europe.

However, in a 2019 speech, Hans Hoogervorst, president of the International Financial Reporting Standards Foundation, said that the existence and increase of such reports do not necessarily mean that companies are striving to be greener.

He noted, one should not expect sustainability reports to be very effective in urging companies to prioritize the planet over their profits. Greenwashing exists and is widespread.

 

Sustainability Reports

A decade ago, a few investors were paying great attention to sustainability reports, then ESG standards began to gain wider ground and gradually more attention until they became the mainstream, and more and more investors were taking environmental dimensions into consideration in their investment decisions.

The spread of the new Coronavirus accelerated and reinforced this trend, and between April and June of 2020, ESG investment attracted net inflows of $71.1 billion globally, according to American financial research firm Morningstar.

The overall pandemic situation has pushed the value of assets under government standards management to more than $1 trillion. In the UK, flows between April and July have exceeded the combined flows for the past five years, according to the popular Calastone transaction network. Investors are also becoming more aware that setting and achieving ambitious, environmentally focused goals is often an indicator of running a business well.

On the ground, if the company can reduce its energy consumption while maintaining or even increasing production, this directly benefits shareholders, and thus reducing carbon emissions is not only important for saving the planet, it has other positive returns. It means good resource management, which in turn means having a vision of real value added to the quality of the investment.

Given all of today's sustainability reports, many investors do not trust it as a faithful reflector of the company's true level of sustainability. One associated problem is that companies have to report to a wide range of stakeholders, including employees, NGOs, clients, and regulators, and the inevitable consequence of reporting on all of these is that the report is littered with a wide range of information, much of it of little relevance to investors interested in environmental, social, and corporate governance.

The second related problem is that sustainability reports and reporting on companies' commitment to them have developed in a partial and incomplete manner, so the report can come with a mixture of information that makes it easier for companies to evade, and leave investors confused.

As McKinsey Consulting stated, these reporting frameworks and standards allow companies significant freedom in choosing their own sustainability information, and investors say they cannot use this corporate sustainability information to make accurate investment decisions and advice.