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ESG standards have left some businesses, individuals, without banking services

There is a move in the financial services industry, driven by activists both in and outside the industry, to deny services to certain customers for their ideological views. ESG (Environmental, Social, and Governance) investing is one rubric used to justify such a move. The power of government, if actively deployed, could accelerate this trend.

During the Obama administration, Politico reported that Chicago Mayor Rahm Emmanuel lobbied two major banks to deny services to certain businesses in the firearms industry. Also during that time, the U.S. Justice Department pressured banks to limit banking services to organizations engaging in activities it deemed to be at high risk for fraud. The program, known as Operation Choke Point targeted gun sellers, pawn shops, and short-term lenders. Critics said it targeted politically disfavored businesses.

Since then, accusations of favoritism have increased to the point where the Comptroller of the Currency, an independent federal agency that regulates many banks, took notice. On Nov. 25, 2020, it listed family planning organizations, private owners of prisons, and gun manufacturers as examples of entities that had reportedly been denied banking services on ideological grounds.

Many reports involve the firearms business. “Some big banks opted to take matters into their own hands by restricting financing for gun sellers,” The New York Times reported in May 2018. AmmoLand, a news service for the firearms industry, reported on Aug. 9, 2022, that a credit card processor was denying service to businesses that, in its view, were not taking sufficient steps to restrict sales of so-called ghost guns.

Some other financial services companies, Bloomberg reported in 2018, exclude gun manufacturers from the socially responsible funds they manage.

Immigration is another hot-button issue that some banks cite as a reason to stop serving certain customers. Bank of America, JPMorgan Chase, and Wells Fargo have stopped doing business with companies that operate private prisons and detention centers for U.S. Immigrations and Customs Enforcement, according to a June 2019 Bloomberg account. Bank of America’s decision “followed a review by the bank’s [ESG] committee.”

Truist Financial, the bank that resulted from a merger of BB&T and SunTrust, cancelled the account of Americans for Legal Immigration PAC, the political advocacy group said on its website.

Some individuals have also been subject to what is being called “debanking.” PayPal has denied service to radio host Alex Jones, according to Fox News. JPMorgan Chase has been accused of denying services to a leader of the Proud Boys, according to the New York Post, which cites a conservative activist. Commentator Michelle Malkin took to the pages of National Review to ask of the same bank, “Is This Bank Chasing Away Conservatives?”

JPMorgan Chase also came under fire for denying service to organizers of an event featuring Donald Trump Jr. The bank eventually reversed its decision, according to Newsweek.

Currently, ESG applies mainly to businesses and high-profile individuals. But financial firms are developing ways for ordinary people to practice ESG investing. Merrill Lynch has developed online tools to let customers manage their investments based on self-selected ESG screens.

Mastercard and S&P Global have teamed up with Swedish firm Doconomy to issue credit cards that track a cardholder’s carbon footprint. But one version of the card takes that idea further; it will deny purchases once a user reaches a predetermined CO2 emissions limit for the year.

These programs for individuals are voluntary. But the logic of social activism suggests that calls to use the financial system to shut out companies or individuals deemed to be on the wrong side on political or social issues will grow in the private sector and perhaps in the public as well.

ESG activism is likely to increase in the corporate sector. Urska Velikonja, a law professor at Georgetown University, was quoted by The Wall Street Journal as predicting that abortion will play a key role in hundreds of shareholder meetings next year. Velikonja says, “We expect for these large asset managers to consider abortion in the same way they consider other social-policy issues like climate change and diversity audits.”

The “E” (environmental) and “S” (social) in ESG are not simply objective credit factors such as a potential client’s income or payment history. They involve, instead, conclusions that people come to on some of the most contentious topics in modern political discourse. Customers who place their faith in an ESG rating put the moral judgement of Wall Street above their own.

It is not clear that most people are willing to live by their stated beliefs on topics such as climate change. Research conducted at the University of Michigan reveals that 72% of Americans believe renewable energy could help limit climate change. But when they were asked how much climate change should require from them, 80% said they were unwilling to spend even a dollar a day to build more renewable energy.

Information can be useful. But the move to entrust difficult questions to influential credit agencies and institutional investors is dangerous.

Joshua Antonini is an environmental policy intern at the Mackinac Center for Public Policy. Email him at

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.