I hope you all had a great 4th of July holiday in the proper American way, with family, food, and a ton a fireworks! I enjoyed a bit of an extended vacation and was able to recharge, spending the remainder of the last week away from politics, in Indianapolis, watching AAU basketball. A break from news and politics is good for the soul!
Both the House and Senate are back at it this week in Washington DC. We are keeping a close eye on the House as they consider H.R. 7900, the National Defense Authorization Act for Fiscal Year 2023. Also known as the “NDAA,” this Act provides credit union access to military bases through a land lease arrangement between the Department of Defense and credit unions. It is very important that we continue to preserve that access in the face of bank opposition. Banks have similar access to military bases under the Military Leasing Act but have yet to exercise this authority.
ESG Score Perfection?
I’m guessing you don’t keep close tabs on Sri Lanka, the small island nation located just off India’s southeastern coast. Sri Lanka is currently suffering quite possibly its worst financial crisis in its history, forcing its President, Gotabaya Rajapaksa to flee the country and ultimately resign from office, effective today. Earlier this week, protesters stormed the presidential palace as the recent economic collapse has millions struggling to purchase food, medications, and fuel. In fact, over the last year food prices have increased 80% and annual inflation has reached roughly 55%.
What does this all have to do with credit unions you ask?
The predominant underlying reason for Sri Lanka’s quick collapse is rooted in its leaders’ blind support and absolute focus on ESG criteria and scoring. ESG refers to investments made following supposed higher Environmental, Social, and Governance criteria and standards. Sri Lanka boasts a near-perfect ESG score of 98, much higher than that of the United States’ score of 51. These higher ESG standards are now being pushed on credit unions and other financial institutions through federal and state legislation, as well as through the regulatory process. We are starting to head down a very slippery slope.
In pursuit of ESG perfection, last year Sri Lanka banned all chemical fertilizers used by the country’s farmers. Almost all the country’s farmers utilized chemical fertilizers. As a result, 85% experienced a loss of crops, with many reporting 50% to 60% harvest shortfalls. Today, the country is almost in complete financial ruin and its inhabitants are suffering greatly.
In order for a company to achieve a high ESG score, they must turn their backs on the oil and gas (fossil fuels) industries, firearm dealers and manufacturers, as well as many other industries that are pivotal to the success of the US economy, in support of “green energy alternatives.”
Don’t get me wrong; we all know and appreciate that renewable green energy alternatives are important. However, as we have seen in Sri Lanka, the consequences of ESG scoring can have a very negative impact on US consumers, our economy, and credit unions looking to invest and support its members.
Join us in Fargo!
Don’t forget to register now for the CU Professionals Forum on Tuesday, August 16 at the Delta Hotels Fargo. This event is open to all credit union professionals and is a great opportunity to bounce ideas and issues around a group of your peers. There is no fee to attend, but we do ask you to register by Friday, August 5th so we can plan accordingly for seating and lunch (on us!) Register here.
As always, feel free to contact me with any advocacy concerns.
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