From our President and CEO


Banks Know What’s Best for Customers, Not Government


At the American Bankers Association Conference for Community Bankers in February, I attended a “Focusing on ESG” breakout session. For those unfamiliar with ESG, it stands for environmental, social and governance. It illustrates a company’s performance in these areas to potential investors, government regulators and the public. ESG is a hot topic in the business community right now, which explains why it was a session at the ABA conference.


During the session, the speaker kept reiterating that banks need to focus their efforts on ESG and how to integrate those efforts into their strategic plans and initiatives. Te more I listened, the more frustrated I became as this brokerage dealer told bankers how to run their banks. I started texting a colleague from a state bankers association and asked, “Are you going to say


something?” Tat individual pointed to me, so I stood up and addressed my concerns to the speaker. Soon aſter, other bankers in the room followed suit.


ESG has been a topic of conversation in Washington D.C. for several years. Under the current administration, the regulators are taking various approaches, including potential mandates, regarding ESG. Te Office of the Comptroller of the Currency is reviewing feedback on its draſt principles that identify and manage climate-related financial risks at OCC- regulated institutions with more than $100 billion in total consolidated assets. OCC could use that feedback for future guidance. Plus, other agencies are watching to see how OCC puts these regs into place before potentially draſting their own rules. It’s just a matter of time before these regulations trickle down


from the largest banks in the country to those on Main Street.


In fact, the noise in Washington has already made its way to statehouses across the country. Here in Missouri, it’s been a discussion topic with lawmakers and potential legislation regarding bank operations.


Let me say this — we do have a climate problem that needs to be addressed. However, rushing to push ESG mandates and policies on banks will not solve the problem. Lawmakers and government agencies — both federal and state — should not tell banks how to run their operations. Banks, not the government, determine which customers — consumers and businesses — they will lend to and conduct business based on sound lending criteria. Telling banks who they can and can’t lend money to or which


Max Cook, President and CEO Missouri Bankers Association


companies they should or should not do business with will eliminate jobs and destroy our economy.


It’s paramount that you stay informed and active on the ESG front. Forcing banks to adopt ESG policy — which is strictly voluntary — is, quite frankly, a silly and backwards approach to solving problems. We need to push back with all our might any time the government tells us how to run our banks. Te banking industry and private business must be able to operate in a free-market environment and make decisions based on traditional credit underwriting and lending policies.


We know how to do business the right way for our customers. We don’t need anyone dictating otherwise.


THE MISSOURI BANKER 5


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