Environmental, Social, and Governance (ESG) has hit Texas again. There are two ESG Awareness Bills introduced this week, one in the House and one in the Senate.
Sen. Bryan Hughes (R-Mineola) filed Senate Bill (SB) 1446 this week. SB 1446 would prohibit state pensions or any agent working on their behalf from considering “social, political, or ideological” factors in their fiduciary decision-making; rather, only “financial factors” may be considered, defined as decisions that would have a “material effect” on the portfolio’s return on investment.
A pension or agent is considered to have violated this prohibition if it’s “reasonably determined” to have made a financial decision based on those political factors, which includes public or private statements or joining a coalition that makes political statements.
The Texas House of Representatives also introduced HB3661. The podcast interview is with Richard Walsh, the citizen-group leader who introduced Rep. Leo-Wilson, (Terri District 23)
The basic overview of this bill is that financial institutions will have to explain on record their rationale if ESG restrictions apply.
Here is the text for HB 3661
88R8206 JES-D
By: Leo-Wilson H.B. No. 3661
A BILL TO BE ENTITLED
AN ACT
relating to the collection and publication of information regarding
the use of environmental, social, or governance scores by certain
financial institutions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle Z, Title 3, Finance Code, is amended by
adding Chapter 272 to read as follows:
CHAPTER 272. REPORTING REQUIREMENTS RELATING TO USE OF
ENVIRONMENTAL, SOCIAL, OR GOVERNANCE SCORES
Sec. 272.001. DEFINITIONS. In this chapter:
(1) "Environmental, social, or governance score"
means a score that is based on measuring a customer's exposure to
long-term environmental, social, and governance risks.
(2) "Financial institution" means:
(A) a bank chartered under state law, including
Chapter 32;
(B) a savings and loan association chartered
under Chapter 62;
(C) a state savings bank chartered under Chapter
92;
(D) a credit union chartered under Chapter 122;
or
(E) a trust company chartered under the laws of
this state.
Sec. 272.002. COLLECTION OF INFORMATION FROM FINANCIAL
INSTITUTIONS REGARDING USE OF ENVIRONMENTAL, SOCIAL, OR GOVERNANCE
SCORES. (a) A financial institution shall provide nonconfidential
information regarding the institution's policies for the use of
environmental, social, or governance scores to the finance
commission in the form and manner prescribed by the commission,
including whether an environmental, social, or governance score
affects the institution's determination of whether to make a loan
or other extension of credit to a customer.
(b) A financial institution shall provide updated
information to the commission under this section if the institution
substantively changes the institution's policies regarding
environmental, social, or governance scores.
Sec. 272.003. TRANSFER TO COMPTROLLER. The finance
commission shall provide information collected under this chapter
to the comptroller in the form and manner prescribed by the
comptroller.
Sec. 272.004. RULES. The finance commission may adopt
rules to implement this section.
SECTION 2. Subchapter B, Chapter 403, Government Code, is
amended by adding Section 403.0146 to read as follows:
Sec. 403.0146. PUBLICATION OF INFORMATION REGARDING USE OF
ENVIRONMENTAL, SOCIAL, OR GOVERNANCE SCORES. (a) In this section,
"environmental, social, or governance score" and "financial
institution" have the meanings assigned by Section 272.001, Finance
Code.
(b) The comptroller shall publish on the comptroller's
Internet website information regarding the use of environmental,
social, or governance scores by financial institutions in this
state using information collected under Chapter 272, Finance Code.
The information published must:
(1) include a list of each financial institution that
has committed to not using environmental, social, or governance
scores in lending in this state; and
(2) be written in language intended to be easily
understood by consumers.
SECTION 3. This Act takes effect September 1, 2023.
Click here for a copy of the bill.
Below is a raw, unedited Artificial Intelligence transcription.
Richard Walsh
I'm Richard Welch. I live in Northwest Harris County, Senate District seven Congressional District 30
Jason Spiess
eight. Alright. Thanks for joining the program here today. We've got a variety of topics to talk about. Of course, Mr Walsh, you're pretty active down there these days in the ESG, environmental social governance world. So low. Let's talk about that. Let's talk about your proposed bill that's going to be hitting the Texas legislature and just some of your experiences trying to get what you wanted and what the reality ended up being.
So, how are you doing today? ... Not too bad. Minus five here in North Dakota. How about you? ... I see. Okay then. Well, well, now that we got that out of the way, let's talk a little bit about some pleasant trees here or not, I guess. Um E S G, what's happening down in Texas? I'm, I, of course, I'm up here in North Dakota covering some of it up here.
I've been covering it down in Texas for the last probably five years. So I have some experience with it, but you're immersed in it every single day. I mean, Texas, I would imagine has got some very passionate opinions when it comes to E S G O.
Richard Walsh
Of course, um, you know, E S G is exploding down here in Texas thing and it's affecting just about every single business owner from the major corporations to the mom and pop, still operating in the, the 500 you know, population city square true value. You know, everybody's having to be subjugated to this E S G and it's, it's really putting a hamper on potential growth
down here in Texas and it's, it's running rampant. There's no oversight, you know, there's, there's uh E S G scoring places popping up and, and just about every city in Texas
Jason Spiess
they seem to be getting funded to. Oh
Richard Walsh
yeah, it's, it's, there's, there's no limit, no limit in sight as to E S G funding uh going on down here and there's, there's more and more um uh how do I even say investment firms getting backing from, you know, companies like Blackrock and, and Glasgow Financial Alliance and, and places like this and, you know, they control all the money
Jason Spiess
we should mention to Glasgow, that's the largest uh financial firm in the world, right? ...
Richard Walsh
Is the largest investment firm in the world.
Jason Spiess
And they kind of came out of nowhere in the last several years actually, since COVID came around, they, they spiked up. Well, well, everybody was watching Michael Jordan with the last dance Glasgow was busy working, weren't they?
Richard Walsh
They absolutely were you know, and everybody talks about Black Rock. That's what you hear. Blackrock, blackrock, Blackrock, what they don't know is that the Glasgow Financial Alliance for Net Zero has amassed 100 and $30 trillion in less than 24 months from their inception date. And they completely dwarf Black
Jason Spiess
Rock man. We're still, our business is still waiting for COVID support and they got 100 and 70 trillion. You said
Richard Walsh
130 trillion.
Jason Spiess
That's,
Richard Walsh
That's more money than the top 20 country GDPS on the planet.
Jason Spiess
So folks, if you're wondering how serious E S G is environmental, social governance, the companies that they're talking about in the news, those are the small companies, Black Rock, those are the small ones. And so Morningstar, these are small companies compared to the Glasgow's of the world and in Texas where everything is bigger, you tried to introduce a Texas side size E S G bill and you found out E S G is bigger in Texas than you thought, huh?
Richard Walsh
Oh, absolutely. You know, I talked with a lot of small business owners and, and financial companies, you know, these smaller banks and they just can't compete. You know, all these, these uh pro E S G um lending companies are completely gobbling up all the money uh for business loans here in Texas.
Jason Spiess
How about your experience introducing this bill? Because when we were talking about this off air to me, it sounded like you didn't really get what you wanted. You, you got a bill and you're happy with it at the end of the day, but you wanted a lot more than what the government could actually legally give you. That's the part I found very shocking that E S G is already a lot bigger than the average person probably thinks.
Richard Walsh
Right. Well, you know, what I wanted to do was, you know, give the smaller banks a chance to compete against these, these major E S G reporting, uh, you know, corporations like blackrock and jpmorgan. Um, I wanted them to be able to be able to pull their money together so that they can start getting, uh, or giving, you know, especially let's take the oil and gas companies that they would have an alternative place to secure funding without having to report and pay all the penalties
according to their fictitious E S G scores from anybody who, uh, is gonna give them one from, from the financial corporations. But unfortunately, according to federal law, even state backed banks or, or they have to abide by, you know, the federal finance, the F E C and the F D I C. So it's impossible.
Jason Spiess
North Dakota has a state owned bank does Texas. Sure.
Richard Walsh
I mean, we have several state backed banks.
Jason Spiess
No, but no, but not state owned though. State, like North Dakota actually has a state owned bank. Like we, it's one of the weird things that we, we try to be as Republican as we can up in North Dakota but with a state owned bank and a state owned flour mill and a state owned, you know, there's, they got several state owned things and the water departments are now kind of these public, private, state owned entity things.
Um, there's a lot of joking up here about for a Republican state. We are very socialized. So I, I think the state owned bank in North Dakota is a little bit different than the state owned state backed banks in Texas.
Richard Walsh
Yes.
Jason Spiess
Um, but go on, go on with this. So, so you, you experienced a little bit of, uh, some federal regulations that would not allow, uh, this bill that you, you know, attempted was because of federal regulations. Is that right? So what was, what was one of the ways that you wanted to allow smaller banks to be competitive to pull the money together was one way? Was that right?
Richard Walsh
Yeah. Well, you know, so if Exxon Mobil needs, you know, a $250 million loan because they want to build a new mid strain facility, you know, Texas State Bank or, you know, Texas Federal Credit Union, you know, they most likely can't finance or, or, you know, guarantee loan that much money, you know, it would tie up all of their capital or it would just be too much capital for them to be able to loan out.
So I wanted the smaller banks to be able to, to let's put it this way more than one bank on a loan guarantee so that the smaller banks would have a chance to compete against the Black Rocks and the J P Morgans and the Bank of America's in the world. And it would, it would kind of defund all of this E S G nonsense because you know, the Texas State Bank or the local federal credit union, they're not gonna care about an E S G score because they're fixing to make, you know, $10 million
and, and, uh, interest, you know, off of these loans. So there, they'd be more than happy to guarantee these loans with, with no expectation of in sort of E S G, uh, play in it.
Jason Spiess
The Bank of North Dakota is a state owned state run financial institution based in Bismarck, North Dakota. It is the only government owned General Service bank in North, in the United States. It is the legal depository for all the state funds in North Dakota and uses these deposits to fund development, agriculture and small business. Yeah, they change some things with the State bank, uh, in the last decade where you, I don't even think you can get a bank account there anymore.
It used to be where the citizens would go bank there and now they've changed it to where it's almost like, kind of like a venture capital fund or something like that. I don't know where there's a lot of questions now surrounding the State bank and what its role is. And the reason I bring that up is because this is what we're talking about, that there's a major change happening in banking.
And the reason the State of North Dakota has a state owned bank was because of predatory bankers 100 years ago. The reason California did not allow outside banks for a long time was because after the civil war, the bankers would come in and take advantage of the Californians. So they didn't allow outside banks for a long time. So California even had some very stringent banking laws to.
So folks, we're talking about a major paradigm shift in banking right now and we're talking about an individual who's trying to make some changes down in Texas. So what is the just quick version of the change that you are trying to do? Now, you're introducing this bill on Thursday this week? Is that when the bill is gonna hit the floor or talk to me a little bit about that too.
Richard Walsh
Yes, that's when it's going to get introduced, uh, into the Texas House of Representatives is on Thursday. Um, it won't actually get voted, voted on on Thursday, but that's when it's getting introduced and I will be over there testifying on behalf of this bill and what the whole purpose of it is is to try and in the corporate or the government approved, uh, corporate financial discrimination that is currently happening, uh, with regard to E S G here in Texas.
Um, this bill should even the playing field for everybody no matter, uh, you know, what line of business these corporations are in, whether it's target or, you know, Exxon Mobil, if they're going to, you know, secure funding here in Texas that, you know, E S G scores are, you know, they're not really gonna play a part in, in, uh, in their credit line here in Texas.
Jason Spiess
Now, you got my mind all curious about the California banking regulations that quick looked it up and it's between 1879 and 1929 is when they had their, they're kind of their, their banking regulations. And then after the Federal Reserve came in, they had, they had to deregulate their state's laws and everything. North Dakota stayed true through it.
I would imagine they have some sort of, um, connection whether it be through the F D I C or through, um, something like that. I'm gonna have to check that out. Now, I'm gonna do an E S G you story on the bank of North Dakota, California's history and just what's going on because this, this does bring up a question. Why is there not a bank in America that's standing up and saying we'll take your money, we'll take your money right here.
Hey, we'll take your fossil fuel money, your gun money, your religion, money. Because guns, God and, uh, gas are the three things that are really under crossfire right now in the E S G world. And absolutely, you know,
Richard Walsh
these things are under fire right there, heavily scrutinized. They're there. They have an immense amount of oversight when it comes to, you know, guns and fossil fuel and religion. I mean, people are constantly wanting to see the books on its companies. Well, where is the oversight when it comes to E S G who is looking out for, for these companies, you know, with, with unfavorable E S G scores and where are these scores coming from?
Where is the oversight on these people? There is no oversight that I've been able to find the federal government doesn't care. The only people that care are these major financial institutions like Blackrock and Glasgow that are, are charging these companies, you know, extra interest, you know, up to 3.5, 4 points more on the interest rate to secure these loans based on their E S G score.
So my whole thing is, is where's the oversights from anybody from any state or the federal government in the world? Not just here in the United States that is providing oversight and, and there's no regulation, all this stuff. So it's pretty much a free for all. And we have private companies making up the rules as they go for E S G discrimination,
Jason Spiess
taking a look at the clock. We have just a few minutes left here and I wanted to just kind of tell a story real quick as we wrap up and get your thoughts and views on it because, you know, I started speaking on this in 2015, I fell into it accidentally. Uh, we have a company that was trying to build a refinery in North Dakota Meridian Energy Group. And they reached out to me because of our distribution and our size and, and our, our business model of being non political, focusing on
innovation with the company called the Crude Life. And so we did a weekly uh it was called that S R S R C R Report or something like that. We kind of called it, it was a social responsibility, corporate responsibility report and then we kind of switched it over to an environmental something or it was a four letter acronym for about a year. And then about 2017 is when the E S G started kind of becoming the, the accepted three letter acronym moniker for where we're at today.
So I started speaking on this in 2015. Well, 2016, 17, I, I was getting kicked out of offices. I was getting booed off of stages. Uh Any oil and gas event that I went to that I would talk about this as a warning as an upcoming issue. And by the way I have pictures of Elizabeth Warren up and Ed Begley Jr because Bernie Sanders hadn't even become popular at this point.
That's how long I've been trying to get people to talk about this. And so now when I look at where we're at in North Dakota, when they introduced their E S G bill, I purposely called it the E S G awareness bill. Well, the government, the people who introduced it as well as the media, the main media, the state owned newspaper, the state largest newspapers, they all called it the anti E S G bill.
So what I'm telling everyone out there that is calling it an anti E S G instead of an E S G awareness. You are validating E S G by calling it anti E S G. They have the narrative. You don't, so they don't even have the laws in place yet. They don't even have the people in place yet. They don't even have a policy in place yet, but they have the narrative. The lawmakers are actually reacting to this. And as somebody who's been covering it since 2015, go ahead and prove me wrong. People, prove me
wrong because we tried to call it an E S G awareness and we got snuffed out by the people in power and the people with money and they wanted to call it an anti E S G. Okay. You got it. The E S G people are in the, in, in, in the lead there in the lead. That's why Glasgow gets 100 and $31 trillion in two years to go support E S G
funded projects. Now, um that went a little bit longer than I anticipated and got a little bit more passionate than I anticipated. Uh Just your thoughts on what I just said, sir.
Richard Walsh
Absolutely love it. Um All of it any time that you mentioned something unfavorable about E S G, you are immediately slammed, attacked. You know, people are coming after you left and right, especially politicians because they are heavily in favor of this. And can I just make one last thing about the Glasgow Financial Alliance for net zero?
You know, we have, there's two very prominent Americans that are on the board of this. Number one is Michael Bloomberg and the other is a former head of the FCC, our own FCC right here in the United States. And that should tell you everything that you need to know about where all of this financial security is coming from.
Jason Spiess
And here's the thing when you look at E S G in a vacuum, environmental social governance in a vacuum. Most people love it. They love 100% of it. It's just like the environmental movement, you did not find very many people who were against recycling. They maybe didn't know how to afford to implement a program immediately, but they would at least be open minded to look at it.
And because that timeline just isn't quick enough for some people who like Al Gore, who uses 34 times the amount of energy for his home than any other middle class person because they're cracking of the whip isn't fast enough for them. I'm not quite sure if we should really go down the path we're going down as quickly as we are now again, E S G in a vacuum. It's a great thing. And that's why there is a ton of laws set up to enforce it.
That's why we have an E P A. That's why we have an F D I C. That's why we have an F C C and F T A. We have a lot of people that are getting paid a lot of money to enforce these regulations already. Another thing no one is talking about is this is gonna add a whole new division of government in order to manage the government who's supposed to already manage this stuff that is not being talked about either Richard.
Richard Walsh
Well, I mean, absolutely. Um, and, you know, there goes more taxes, you know, because you need a whole another branch of government to, uh, you know, provide oversight on this and you know, who, who's going to do it. You know, the I R S, the FTC, the FTC, nobody
Jason Spiess
knows. But my point is that these, everything E S G is asking for there is already people in place budgets and dollars deployed to enforce it and no one is holding those people accountable. And now what they're trying to do is they're trying to get more money to throw at the problem and blame the people. The people have paid enough. There are already people in place to enforce this stuff.
You don't, you don't need to, what they're trying to do is they're trying to create a law that says you can't steal from Target. You can't steal from Walmart. Well, there's already a law that you can't steal. So why do we need to add another law that says you can't steal from specific stores? That's what they're doing. They're, they're, they're just trying to specify and spice and parse laws even further that are already on the books in North Dakota.
For example, our oil and gas industry, They've been getting away with a lot because they're, they're burning 7-9 times the amount of flaring than Texas. And we have a lot of mineral owners very upset. They're very upset because they should be getting paid and they're not, they're just literally burning money. So that's a problem. That's a problem. And so that's why you have this E S G stuff because if the state regulators did their job and got paid and they would actually use the
dollars to invest in innovation to solve those problems, We could have a state-owned refinery for crying out loud. The amount of money we've invested in the last 10 years in this state that we've just blown and given to nonprofits that aren't even around anymore. We could have a state-owned refinery and have our own energy independence. Instead, we're asking Joe Biden for more money. So Texas good for you guys for doing this. Um
Richard Walsh
Well, sure. And this E S G movement is way more organized than, than we are right now. You know, on opposing this, they're more organized than the government. And, you know, when you have the former head of the FCC, Mary Schapiro, who is on the board of Glasgow Financial Alliance for Net Zero, that tells you that they are
very organized and they have their stuff together and there's probably a whole bunch of laws fixing a head into the United States to back all of this, uh E S G discrimination
Jason Spiess
as a lifelong world wrestling entertainment fan back when they called it World Wrestling Federation. That's all. Long ago. I used to watch wrestling was a Saturday morning cartoon for crying out loud. It just seems very similar to pro wrestling. It just seems like they've already determined the winner and both sides are going through the motions and instead of head locks and pile drivers and body slams, they're using sound bites and talking points.
That's what it seems like to me. Absolutely. Well, last word, sir, what do you want people to walk away? From tomorrow's the big day. It's gonna be uh introduced and will be voted on probably next week. You think?
Richard Walsh
I believe so.
Jason Spiess
And when are you testifying in,
Richard Walsh
I'm testifying in Austin on behalf of, on behalf of this bill in front of uh the finance committee. And, uh, you know, they're, they're, they're loving this because, you know, it promotes equality and lending here in Texas. Uh This bill is gonna do great things. I have no doubt. It's also going to add, I believe a lot of additional capital uh to the Texas budget. And I think a lot of other states are gonna be coming to Texas to get away from a lot of this E S G reporting for their uh their
financial side, you know, their, their lending. So I think it's, it's going to do a lot of good things for Texas. And I hope that a lot of other states look at what we're doing here in Texas, especially like Oklahoma and North and South Dakota to follow Texas lead and, and implement something like this on their own.
Jason Spiess
Well, we appreciate your courage here at E S G you because as we mentioned, sometimes it's not easy to go against the grain or to, you know, walk out into the light, you know, to become enlightened, the word light isn't enlightened. And so sometimes you gotta open the eyes a little bit to get out of the darkness to, you know, expand your mind and open your mind a little bit.
And that's one of the things that E S G University is trying to accomplish that we might not be talking about all the stuff you agree with and we might say some things that might make you mad and you might agree with you might like. But what we're gonna do is we're gonna educate you here and we just brought a gentleman who's bringing a bill beforehand, talked about some of the issues beforehand.
How much of the bill would you say that ended up being what you wanted? Percentage wise? So if 100% was everything you wanted at the end, what percentage of the bill would you say is gonna actually be introduced?
Richard Walsh
Half, only half of the bill that I originally wanted to get filed was actually legally possible to do because of the intense amount of federal regulations surrounding all of these
Jason Spiess
things. And the fact that you're continuing on shows your courage once again because a lot of people would have walked away, fed up, dissent, heartened with the system, all these different things. So this is so congratulations on, you know, um playing, playing a part, doing your role, helping create awareness on I believe the most important topic on the planet right now, which is E S G, environmental social governance, which affects everything.
So that's why we need something now. Not, not later because it affects everything. I mean, I'm looking at cat toys right now. They're all E S G related because I guess they're plastic and they come from China E S G right there. Cat toys there. Alright man. Well I appreciate the time today.
Richard Walsh
Thank you. Thank you sir. I appreciate uh being on your show and and thank you for educating the people on E S G. Um the good, the bad and the ugly uh keep up the good work.
Jason Spiess
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Two New ESG Awareness Bills Introduced in Texas