Coconino County Treasurer Sarah Benatar told lawmakers Tuesday that her job is to give taxpayers the best and safest return on public investment, but the “anti-ESG” bill puts public money at risk.

Anti-ESG legislation is a collective term for conservative-backed legislation that limits the consideration of environmental, social and governance (ESG) factors in financial decision-making. They argue that financial regulators should not sacrifice investment returns to prioritize non-financial ESG factors in business and financial transactions.

But Benatar said the laws would prevent state and local finance officials like him from considering climate change as a financial risk factor when making investment decisions, reducing competition among service banks and hurting local economies.

“We need to consider climate risk as part of our financial risk analysis, and we should be able to do that,” Benatar said. said after testimony Submitted to the House Subcommittee on Financial Services. “Ignoring this in the financial industry honestly does me, my voters, and all of us at the local level, voters and taxpayers a huge disservice.”

Republicans on the committee disagreed, arguing that allowing financial regulators to consider ESG and climate risk factors in financial decision-making overly politicizes what should be purely economic decision-making.

Benatar served on a panel that included officials from the Federal Reserve System, Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, and was questioned by Republican lawmakers about the political motives of each agency.

Rep. Andy Burr, Republican, Kentucky.Said hearing – Titled ‘Climate Risk: Are Financial Regulators Politically Independent?’ He said ESG-friendly policies are aimed at politicizing credit lending and are “an attempt to bankrupt the energy sector of our economy.”

Rep. Blaine Lutkemeyer of Missouri echoed this sentiment, saying, “It’s disturbing that a supposedly independent banking regulator is trying to introduce partisan climate policy in the name of helping financial institutions stay vigilant against climate-related financial risks.”

But panelists repeatedly rejected lawmakers, saying that while they have an obligation to study the impact of climate change on financial institutions, lawmakers do not formulate climate change policy and that is the job of Congress.

“It is our responsibility to ensure that the risks faced by banks are considered,” Michael said. GibsonDirector of Oversight and Regulation for the Federal Reserve Board.

Benatar agreed, saying anti-ESG legislation is often referred to as “fair access” legislation, but is in fact anti-free market legislation. These could drive up costs for taxpayers by stifling competition among local banks, which Benatar said was “essential to ensuring the protection and efficient use of taxpayer funds.”

“The introduction of anti-ESG laws in states like Arizona will remove many bidders from the process entirely,” Benatar said. “In a county like ours, at best you have one option, and it will cost you more.”

The hearings come as many states, including Texas, Florida and Kansas, move to pass anti-ESG legislation under the direction of conservative lawmakers who say it will protect the fossil fuel industry and states whose economies depend on it.

Governor Katie Hobbs vetoed a state last month Senate bill That would have prohibited public authorities from requiring companies to adopt ESG criteria as a condition of doing business with governments.

“We do not believe it is in the best interest of Arizonas to tie the hands of the state’s procurement and investment professionals,” Hobbs said. her veto message.

Benatar said states that passed anti-ESG laws that limit banks’ discretion in lending or encourage boycotts of companies that prioritize ESG are now suffering from rising costs and fewer companies with which they can do business.

He said there are currently only five banks in Arizona that can service the county, and he is concerned that anti-ESG legislation will further reduce competition, leaving the county with even fewer options than it currently has.

In the worst case, Coconino County would not get bids for banking services, he said, and the local economy would be “severely hurt” as consumer costs would “increase significantly.”

Benatar was also concerned that anti-ESG legislation would prevent all risk factors, including climate, from being considered when considering the risks of an investment. As a county employee who has faced “numerous wildfires, floods, tornadoes, record snowfall, record heat and drought,” she said environmental risks need to be considered when “deciding which bonds to buy.”

“Organizations and financial institutions really consider all risks, so anything that prevents me from doing business, I should too, and it hurts taxpayers,” Benatar said.

Closing after a two-hour hearing, Mr. Barr said he was “disappointed” by witness testimony that “there is a persistent concern that regulators’ focus on climate-related financial risks may actually politicize credit allocation.”

Benatar disagreed, saying climate risk was a very serious concern for Arizona taxpayers and investors.

“This is not a politicized effort, it really isn’t,” she said. “We look at risk. In my world that is the number one priority.

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