• ESG policies hurt farmers by limiting access to financial services, increasing costs, and ultimately threatening food production and affordability
  • The Farmers Protection Act (HB 62) would prevent banks from denying services to farmers based on ESG-related factors like greenhouse gas emissions, fertilizer use, or fossil-fuel–powered equipment
  • The bill would create a rebuttable presumption against ESG-aligned banks, requiring them to prove that a decision to deny or restrict services to an agricultural producer was not based on ESG goals

Environmental, Social, and Governance (ESG) policies have rapidly gained traction in the financial sector, influencing investment decisions and regulatory frameworks. For American farmers, however, ESG-driven financial practices have introduced new costs, restricted innovation, and jeopardized the economic viability of small and midsize farms. In response, North Carolina’s proposed Farmers Protection Act aims to shield agricultural producers from discriminatory financial practices rooted in ESG criteria.

Summary of the Farmers Protection Act

The Farmers Protection Act, House Bill (HB) 62, would introduce critical safeguards against financial discrimination targeting agricultural producers. The bill would prohibit banks from denying or canceling services to farmers based on specific ESG-related criteria, such as their “greenhouse gas emissions, use of fossil-fuel derived [nitrogen] fertilizer, or use of fossil-fuel powered [gasoline or diesel] machinery.” The bill addresses farmers’ concerns as they face increasing financial barriers owing to ESG-aligned banking policies.

A key component of the legislation would be the establishment of a rebuttable presumption against banks that have publicly committed to ESG initiatives. If such a bank denies or restricts services to an agricultural producer, the bill would presume that ESG commitments influenced its decision. To overcome this presumption, the financial institution would have to provide clear and convincing evidence that its actions were based solely on financial considerations rather than ESG-related objectives.

The bill would mandate that banks annually attest to their compliance with its provisions. Under penalty of perjury, financial institutions would be required to submit a report verifying that they have not engaged in ESG-based discrimination against agricultural producers.

Enforcement mechanisms would include civil penalties and potential legal action. If a bank were found in violation of the law, the Commissioner of Banks would be able to initiate a civil suit seeking an injunction or financial penalties. Courts could impose fines of up to $10,000 per violation.

The Farmers Protection Act would extend its anti-discrimination provisions beyond traditional banking institutions. The bill would explicitly apply its restrictions to state savings banks, state associations, and credit unions. These entities would have to adhere to the same compliance requirements and be subject to enforcement measures outlined in the legislation. By covering a broad range of financial institutions, the act would ensure that all farmers, regardless of where they bank, received equal protection against ESG-based financial discrimination.

Lessons from Other States 

North Carolina is not alone seeking to push back against ESG-driven financial discrimination. Several states have enacted similar protections to safeguard industries targeted by ESG policies.

  • Texas passed a law barring state contracts with financial firms that boycott the oil and gas industry. This policy prevents banks from using ESG standards to exclude oil and gas companies, setting a precedent for protecting other industries, including agriculture.
  • West Virginia implemented regulations affecting financial institutions that refuse to lend to coal and energy companies due to ESG considerations. The state treasurer’s office created a list of banks engaging in these practices and prohibited them from handling state funds.
  • Oklahoma, like Texas, enacted a law restricting state contracts with financial institutions that discriminate against oil and gas companies as well as agricultural industries based on ESG principles.
  • South Carolina introduced its own version of a “Farmers Protection Act” last year in a bill with language nearly identical to North Carolina’s Act.

These examples demonstrate the growing awareness across the country of the need to counteract ESG overreach and protect industries critical to economic stability.

Why It Matters for Farmers 

Agricultural producers operate in a complex and unpredictable environment, with challenges ranging from volatile commodity prices to unpredictable weather patterns. ESG-based financial discrimination adds another layer of difficulty, making it harder for farmers to secure the loans and banking services necessary to sustain their operations. The Farmers Protection Act would ensure that North Carolina’s farmers could continue accessing financial resources without being penalized for employing traditional farming methods.

Moreover, by restricting ESG-based banking practices, the bill would help prevent the unintended negative consequences of ESG policies, such as reduced agricultural productivity and higher food prices. Consumers ultimately bear the cost of ESG-imposed restrictions, as limitations on fertilizer use and diesel-powered equipment lead to lower crop yields and increased food costs. Protecting farmers from financial discrimination preserves food affordability and security for all North Carolinians.

Conclusion

The Farmers Protection Act would be a strong step forward to safeguarding North Carolina’s agricultural sector from the harmful impacts of ESG-driven financial policies. By prohibiting banks from denying services based on ESG criteria, ensuring transparency through compliance reporting, and implementing strict enforcement measures, the bill would provide essential protections for farmers. As other states have demonstrated, pushing back against ESG overreach is necessary to maintain a fair, competitive financial landscape. In defending the right of farmers to access financial services without ideological interference, North Carolina would be taking a stand for economic freedom and agricultural sustainability.