House Agriculture Committee approves anti-ESG ‘Farmers Protection Act’

On Wednesday, the House Agriculture and Environmental Committee voted to approve “The Farmers Protection Act,” prohibiting financial institutions from blocking farmers from obtaining loans based on ESG (Environmental, Social, and Governance) ratings.

“The Farmers Protection Act” (HB 62) was introduced by state Rep. Neal Jackson, R-Moore, earlier this month. State Rep. Jimmy Dixon, R-Duplin, presides as chairman of the committee and conducted the meeting. 

“Banks have historically evaluated companies of traditional financial metrics of profits and losses,” said Jackson in introducing the bill to the committee. “Recently, they’ve added new mechanisms such as Environmental, Social, and Governance (ESG) practices. What this bill does is it says you cannot deny or cancel financial services based upon a farmer’s ESG score or rating figure. It is based upon whether they have good credit or not but not based upon their ESG score.” 

Rep. Pricey Harrison, D-Guilford, indicated she didn’t believe there were currently any financial institutions in North Carolina blocking farmers from obtaining loans based on ESG practices. 

Jackson addressed her point, stating that, to a certain point, this bill is a preventative measure and also pointing out that many financial institutions have rolled back their policies in light of the Trump administration coming to power. 

“We’re saying let’s set up the boundaries while all of these the winds are blowing saying it’s not politically correct anymore to use ESG,” responded Jackson. “Let’s set up the barriers so that we’re not going to use that (ESG) now while we have this administration.”

State Rep. Deb Butler, D-New Hanover, also voiced her concerns and opposition to the bill. 

“I’m deeply troubled that we’re going to try to tell private companies who they can and cannot lend money to; we want to prevent discrimination in this country,” said Butler. “We love our North Carolina farmers, but y’all are not a protected class. You are business people, and you have arm’s length transactions. And if these banks don’t want your business, I’m sure you’ll find somebody who does. This is not our province to monitor; it really isn’t. If you believe in free markets, and you believe in arm’s-length dealing, and people making deals as best they can with competition and so forth, you just really shouldn’t support this bill.” 

Jackson offered a rebuttal to Butler’s objections.

“After I left the General Assembly yesterday, I went home, and I got on my red tractor. I have a lot of F30 black Angus cows and took them out hay,” said Jackson. “What [ESG] does specifically: It would tell me the type of fertilizer I would use. It would tell me the type of tractor. They would want me to go to electric tractor rather than my diesel tractor. It would want me to limit the number of livestock that I have. That has nothing to do with: do I pay my bills? That is invading my privacy.  So, all this does is say, ‘You can do banking in North Carolina.’ Let’s not do this social-political stuff when you say you’re doing banking.”

Butler pushed back against Jackson’s point, saying that if you disagree with a particular lending institution’s policies, don’t borrow money from them. Similar to the way one would not shop at a store or support a business whose policies one does not align with.

Dixon said that it is the committee’s business to tell people how to conduct their business, and that the committee has conducted this kind of business before. He clarified that the committee is not “zeroing in on private businesses.” It always zeroes in on businesses. 

“One thing about America and one thing about American agriculture, we want to be free,” said state Rep. Jeffrey McNeely, R-Iredell. “There are limited resources as far as financial institutions, and if those get polluted with ideas that are not going to allow you to freely farm your land, then we have a basic problem with the Constitution of the United States and our beliefs in what we are as a country.” 

The committee voted to approve the PCS (Proposed Committee Substitute), which is the final amended version of the bill. The PCS has now been referred to the House Rules Committee.

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