Concerns raise over climate related lending restrictions

Senate Republicans recently raised concerns over the Biden administration using the financial regulatory system to compel banks and credit unions to mitigate their exposure to climate risks by restricting lending to certain sectors.

In a letter to the president, 11 senators said such efforts “could harm farmers’ and ranchers’ access to capital and compromise our nation’s food security.” Two weeks ago, the Securities and Exchange Commission (SEC) proposed regulations mandating that publicly traded companies report on their carbon emissions and other climate-related information, including not only their direct greenhouse gas emissions but the GHGs from partner companies, suppliers and distributors.

The National Pork Producers Council is reviewing the SEC proposal and plans to submit comments on it. The Senate lawmakers pointed out that the Office of the Comptroller of the Currency recently issued draft principles warning banks that “climate-related financial risk” may have “impacts on shareholders’ expectations, the bank’s reputation, and [low- and moderate-income] and other disadvantaged households and communities.” The Federal Reserve also is looking at environmental matters — which are beyond its statutory authority — and the Commodity Futures Trading Commission has established a Climate Risk Unit to address environmental issues, the senators noted. 

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