U.S. banks that decide to stop lending to fossil fuel companies could face sanctions unless they can show they are doing so because of purely financial concerns, under a new rule proposed by the outgoing Trump administration.
The Office of the Comptroller of the Currency said its rule would require banks to offer services fairly based on unbiased risk analysis, rather than for political reasons.
The banking regulator’s move is the latest in a series of administration attempts repel against the progression of the ESG movement, which argues that environmental, social and governance factors must be taken into account in investment decisions.
the rule In part stemmed from complaints from politicians in Alaska who said bank decisions to stop lending to new arctic oil and gas projects had hurt the local economy.
In the past 12 months, banks such as Goldman Sachs, JPMorgan Chase, TD Bank and Deutsche Bank have said they will no longer fund new drilling projects in the region, according to the Sierra Club, an advocacy group. of the environment.
“It is one thing for a bank not to lend to oil companies because it does not have the expertise to assess or manage the associated guarantee rights,” the OCC said on Friday. “It is another for a bank to make this decision because it believes that the United States should meet the standards set in an international climate treaty.”
Banks have come under pressure to stop doing business with organizations involved in politically controversial but legal ventures – from energy companies and gunsmiths to private prison operators and family planning clinics – in recent years, has declared the OCC. But all “are entitled to equitable access to financial services under the law.”
His proposal applies to US and international banks with $ 100 billion or more in assets.
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The OCC’s proposal will be open for public comment until Jan.4, leaving a small window for it to be finalized before President-elect Joe Biden’s term begins on Jan.20. The head of the OCC can be removed by the president.
The current comptroller, Brian Brooks, is in an interim role and President Donald Trump has offered this week to appoint him to the Senate for confirmation.
“There is a chance” that the OCC proposal could be finalized before Mr Biden takes office, said Graham Steele, a former assistant on the Senate Banking Committee who is now at the Stanford Graduate School of Business. “They try.”
Last month, the Department of Labor passed new rules governing retirement savings plans aimed at discouraging the use of ESG-aware funds, even though the final rules were weaker than those originally proposed earlier. during this year.