The latest threat to agriculture can be identified in three familiar letters.
State Treasurers of the State Financial Officers Foundation (SFOF) told The Epoch Times Nov. 14 that America’s agricultural base could be threatened by top-down pressure for environmental, social, and corporate governance (ESG) rating.
“It’s a real threat,” Nebraska State Treasurer John Murante said.
Agriculture is essential to the economy of Cornhusker State, as this nickname suggests. The University of Arkansas reports that Nebraska produced more than $21 billion in farm cash receipts in 2020.
During a roundtable with Louisiana State Treasurer John Schroder and SFOF CEO Derek Kreifels, Murante warned that ESG criteria in the financial sector pose a real risk to agriculture as we know it.
Many leading asset managers and banks have committed to ‘Net Zero by 2050’, often by participating in UN-linked entities such as the ‘Glasgow Financial Alliance for Net Zero’ and ‘Climate Action 100 “.
If these powerful institutions decide that agriculture and livestock are excessively harmful to the climate, the flow of capital to agriculture could slow down, long before consumers feel the impact at their table to know the impact ESG efforts.
“When it comes to farmers and ranchers, how do you get to net zero when using fertilizerwhich is produced by natural gas, is extremely difficult, if not impossible, which is why we sometimes joke that the policy of some asset managers seems to be that farmers can continue to grow food, they can’t all just not use water or fertilizer to grow them,” Murante told The Epoch Times.
“The attack,” he said, “has already begun.”
Murante pointed out that BlackRock CEO Larry Fink recently joined former President Bill Clinton at a Clinton Global Initiative meeting in September.
Murante warned: “They don’t talk in theory, they don’t use rhetoric, they are committed to making it happen, and we don’t think it’s appropriate at all for public finances to be used for that purpose. ”
Murante believes that the dramatic increases in fertilizer prices since 2021 can be attributed in part to ESG or ESG-like policies which are among the factors driving up the price of energy.
And activist investors who want companies to divest from fossil fuels as quickly as possible aren’t exactly keen on funding new fossil fuel exploration and production.
Between July 2021 and July 2022, the cost of anhydrous ammonia fell from $726 per tonne to $1,469 per tonne, according to the University of Illinois. That’s an increase of more than 200 percent. Other fertilizer prices also increased during the same period, according to the same source.
“Every time you increase energy costs, you make farming and ranching extremely difficult,” he said.
“Farmers are not Wall Street bankers. They cannot afford to absorb a 200% increase in the cost of their goods and their cost of operation,” he continued.
Louisiana State Treasurer John Schroder shares these concerns about ESG and agriculture, as well as other core industries for many states, including his own.
“Louisiana is heavy on oil and gas and heavy on agriculture,” he told The Epoch Times.
Missouri State Treasurer Scott Fitzpatrick told The Epoch Times that he was unaware of many examples of ESG policies directly impacting farmers and ranchers. But he agreed that ESG indirectly hurts food production through its effect on energy prices and inflation.
“I think we can definitely attribute the rising cost of energy to ESG activism,” he said.
He believes ESG risk for farmers and ranchers will increase significantly if ESG-like regulations on banks and the private sector continue to expand.
Fitzpatrick is particularly concerned about the proposal from the Federal Deposit Insurance Corporation (FDIC) principles on what the US government agency has classified as climate-related financial risks.
Virtually all banks in the United States have FDIC coverage.
Coupled with climate risk rules proposed by the Securities and Exchange Commission (SEC), a tough line on climate from the FDIC could ultimately make things even harder for food producers, Fitzpatrick believes.
“That’s when you’re really going to have a significant impact on [agriculture]I think.”