Wells Fargo Debanking and the Role of ESG

Wells Fargo's decision to debank certain companies is largely driven by Environmental, Social, and Governance (ESG) considerations.

The bank has made it clear that it will no longer do business with companies that have a significant impact on the environment or engage in practices that harm society.

Wells Fargo's ESG criteria include a company's greenhouse gas emissions, water usage, and waste management practices.

Wells Fargo has been accused of debanking, or closing accounts without warning, particularly for customers with conservative views or those who have expressed dissenting opinions.

Many customers have reported receiving letters from Wells Fargo stating that their accounts have been closed due to "inactivity".

Wells Fargo has been criticized for its handling of account closures, with some customers alleging that the bank has unfairly targeted conservative or libertarian customers.

The bank has denied any wrongdoing, stating that account closures are a result of standard business practices.

Some customers have reported being debanked after speaking out against Wells Fargo's policies or practices.

Wells Fargo has a history of controversy, including a 2016 scandal in which the bank was fined $185 million for opening millions of unauthorized accounts.

In 2020, Wells Fargo was ordered to pay $3 billion to settle claims that it had misled investors about its auto insurance business.

The bank's debanking controversy has raised concerns about the erosion of free speech and the targeting of conservative or libertarian customers.

Wells Fargo has a history of controversy surrounding its ESG policies. The company has faced criticism for its role in funding fossil fuel projects, with a 2020 report showing that Wells Fargo invested over $13 billion in fossil fuel companies between 2016 and 2020.

Wells Fargo's ESG policies have also been called into question due to its handling of environmental issues. The company has been accused of not doing enough to address the environmental impact of its lending practices, with a 2019 report highlighting the bank's involvement in several high-profile environmental controversies.

Wells Fargo's ESG policies are overseen by its Environmental, Social, and Governance (ESG) Committee, which is responsible for ensuring that the company's investments align with its ESG goals. However, the effectiveness of this committee has been questioned, with some critics arguing that it lacks transparency and accountability.

Wells Fargo is under pressure to explain its ESG policies, which have raised concerns among some attorneys general and customers.

The bank has pledged to align its customers' greenhouse gas emissions with aggressive 2030 targets to align with the Biden administration's net-zero goals.

Attorneys general are worried that Wells Fargo is pushing the Biden administration's anti-gun and anti-traditional energy policies and discriminating against customers who don't fall in line with their political beliefs.

Wells Fargo has vowed to deny service to companies deriving the majority of their revenues from coal extraction and coal mining companies deriving the majority of their revenues from mountaintop removal coal operations.

The attorneys general are questioning who will be next on the list of customers that Wells Fargo will determine cannot be allowed as customers.

They are also concerned about a deal between Wells Fargo and BlackRock, where Wells Fargo agreed to decrease the amount BlackRock had to pay if they met racial quotas, but would increase the amount if they failed to meet those quotas.

This agreement has raised serious questions about racial discrimination in employment and whether contracts like these represent a conspiracy to violate the law.

Piggybacking on ESG is a growing concern. A coalition of 18 GOP state attorneys general sent a letter to International Shareholder Services and Glass Lewis & Co. in November, expressing disappointment with JPMorgan's decision not to do business with a nonprofit committed to advancing religious freedom.

The coalition accused the two shareholder groups of opposing de-banking proposals, despite claiming to be apolitical and neutral. They pointed out that the groups' voting recommendations reflect the opposite of their stated commitment to fairness and diversity.

These shareholder groups provide proxy voting advice to many businesses and investors, making their recommendations a significant factor in the outcome of shareholder proposals. The coalition cited the decision by JPMorgan not to do business with the nonprofit as an example of viewpoint discrimination.

The attorneys general within the GOP coalition have raised the prospect of pursuing legal action against targeted banks, citing the potential for legal liabilities.