July 25, 2024

Transition Finance Weekly 

Exploring the policy, politics, and economics of the clean energy transition

Each week here in Transition Finance Weekly, researchers and analysts from Pleiades Strategy summarize the top stories and trends related to the policy, politics, and economics of the clean energy transition in the states.

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MEET FRANCES SAWYER

“Money, Money, Money: Considering Climate Risk in State Financial Decision Making”

Friday, Aug. 2, 2024, 3:45 pm

Are you a state legislator or staffer? Join Pleiades Strategy founder Frances Sawyer for a panel session at the NCEL National Forum in Louisville, Kentucky. She’ll discuss how public financial authorities can improve their approach to climate risk.

The National Caucus of Environmental Legislators (NCEL) is the primary nonpartisan resource for state legislative champions working to protect, conserve, and improve the natural and human environment. Every year, members come together at the National Forum to network and exchange ideas — and learn about solutions.

1. “Anti-Woke” Banking Laws Are a National Security Risk

Treasury warns the states: anti-ESG laws could lead to money laundering, terrorism, and other criminal activity.

• The banking industry has pointed out that anti-ESG laws, like Florida’s law that prohibits banks from considering non-financial factors in business decisions, could violate their federal obligations under the Bank Secrecy Act and the Anti-Money Laundering Act.

• Last week, in a blunt letter to lawmakers, the Treasury Department agreed. The Treasury letter came in response to concerns from three House members, who had said such laws could force banks to facilitate financial crime, accept risky customers, and disclose information that could compromise national security.

• Financial institutions need to be able to make decisions based on risk — including climate risk. As we noted in our Statehouse Report, bills like Florida’s have been introduced in 14 states, and Tennessee’s version passed. In state after state, banking associations have pointed out that the bills interfere with sound business practices; of Indiana’s proposed bill, a banking representative said it “takes a sledgehammer” to their ability to navigate risk assessment.

Treasury Undersecretary Brian Nelson: “State laws interfering with financial institutions’ ability to comply with national security requirements heighten the risk that international drug traffickers, transnational organized criminals, terrorists, and corrupt foreign officials will use the U.S. financial system to launder money, evade sanctions, and threaten our national security.”

2. Oklahoma Judge Blocks Anti-ESG Law, This Time for Good

The judge had issued a temporary injunction in May; now the injunction is permanent.

• A member of the Oklahoma state retirement system had sued the state last year over the law, arguing it inserted politics into financial decisions. This week Judge Sheila Stinson permanently blocked enforcement of the law, on multiple constitutional grounds. The attorney general will appeal to the Oklahoma Supreme Court.

• The American Accountability Foundation, a right-wing activist group, had alleged Stinson could not be impartial because the plaintiff’s lawyer had made a campaign contribution to her husband, but attorneys from both sides declined to ask her to recuse.

• Stinson’s temporary injunction in May allowed Oklahoma’s retirement system to renew its contracts with investment managers BlackRock and State Street, which are on the state’s blacklist.

• The Oklahoma Rural Association found that the state has spent an additional $185 million due to the law, and that cities and towns were spending 15% more in borrowing costs. Similar laws are in place in 4 other states, but failed to pass in 9 others. (See our anti-ESG tracker here.)

From Judge Stinson’s order: Plaintiff has shown a “substantial likelihood of success” in proving the law is unconstitutionally vague; five separate sections, she says, contain “conflicting and vague provisions.”

3. What a President Harris Would Mean for Climate Finance

As Vice President, Kamala Harris broke the tie on the Inflation Reduction Act. As President, she could do so much more.

• With Harris now the presumptive Democratic nominee in the presidential race, advocates are looking at her record on climate finance, and they like what they see. Her previous policy positions have been aggressive, including a 2020 campaign climate plan calling for a green bank to deploy climate capital, $10 trillion in climate spending over 10 years, aggressive carbon-neutrality goals, and international cooperation on managed fossil-fuel decline.

• While in the Senate, she joined Rep. Alexandria Ocasio-Cortez (D-NY) in advocating for climate equity, which became a priority in the Biden-Harris White House, and pressed for school bus electrification.

• And as VP, she aggressively campaigned for the transformative Inflation Reduction Act around the country, and then cast the deciding vote.

Climate nonprofit Evergreen Action: “Vice President Harris has been integral to the Biden administration’s most important climate accomplishments and has a long track record as an impactful climate champion.”

4. EPA Distributes $4.3 Billion in Climate Pollution Reduction Grants

Total reduction impact: almost a billion metric tons of CO2 equivalent by 2050.

• The EPA’s Climate Pollution Reduction Grant program has funded the implementation of $4.3 billion worth of community-driven climate programs in 30 states. These grants follow $250 million in planning grants that were awarded last year.

• Funding will cover the development of up to 19,000 MW in new solar and wind by 2030, electric transportation and logistics infrastructure, industrial emission reductions, energy efficiency in buildings, climate-friendly agriculture, landfill methane capture, and more. Many initiatives have explicit environmental justice goals.

• Taken together, the initiatives will eliminate more emissions than 5 million homes generate over 25 years.

EPA Website: See all the projects

5. Who’s Funding the Anti-ESG Movement?

Just six groups are behind the national anti-ESG strategy, and the same corporate billionaires and dark-money funders are putting up most of the cash for all of them.

• Pleiades senior advisor Connor Gibson, who manages our Anti-ESG State Action Trackers and is co-author of our Statehouse Report, has released a new analysis. It details the money ties between secretive funders and the handful of right-wing extremist groups running the anti-ESG movement.

• The extremist groups — Heritage, ALEC, SFOF — are mostly familiar. But plenty of the funders are obscure dark-money funds and foundations that operate behind the scenes.

See the analysis | Who’s funding who: foundations | Who’s funding who (dark money)

THE ATLAS OF ACCOUNTABILITY

Use the Atlas of Accountability, a new climate impact tool from Rebuild by Design, to see where our climate-fueled extreme weather disaster funds are going, by county and congressional district across the country. It’s based on historical federal disaster declarations.

Climate disasters are everywhere; 91% of congressional districts have seen one. So far, tornadoes and inland floods due to storms represent the biggest climate impact, but that may change as sea-level rise accelerates. (Extreme heat isn’t counted, because it isn’t considered a “disaster” by the U.S. government, but there’s currently a push to change that.)

As the impacts of climate change worsen, the only way to mitigate the cost of disasters will be to improve climate adaptation infrastructure: build floodwalls and drainage, limit settlement in impacted areas, adopt building plans that utilize natural cooling and heating, and enforce safe zoning and maintenance codes.