7 ways banks are responding to social and political change

July 22, 2022 12:03 PM

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During any kind of social or political overhaul, banks must consider the impact. With a number of recent issues such as climate change, gun control legislation and most recently the overturning of Roe v. Wade, the banking industry has no shortage of issues on its plate to address.

Read more about how recent social and political issues are impacting the banking industry in our roundup.

Supreme Court Overturns Roe v. Wade Abortion-Rights Ruling

Valerie Plesch/Bloomberg

Banks react to the overturning of Roe v. Wade

After the Supreme Court’s decision to overturn Roe v. Wade, some banks have taken immediate action.

Among the industry’s biggest, Citigroup, JPMorgan Chase, Bank of America, Wells Fargo and Goldman Sachs have expanded employee health benefits to cover out-of-state abortions. At some of the smaller banks, CEOs have also spoken out against the ruling.

“Women’s participation in the workforce is contingent on access to comprehensive reproductive health care, and that includes abortion,” said Maura Keaney, first vice president of Amalgamated Bank in New York City.

Read more:

Banks weigh in on the overturning of Roe v. Wade

PNC’s CEO pushes back on criticism that banks must work to combat climate change

Investors, lawmakers and regulators across the industry are pushing for new business practices to combat climate change. At an industry conference, PNC CEO Bill Demchak argued that the government should make policy choices on social and environmental issues, rather than criticize bankers.

“For the banking system, it's a real climate change issue for the country that we need to transition, but our policies to do that are terrible,” Demchak said. “Trying to shame people out of certain exposures for social reasons without a plan, without a formidable plan on the other side to actually cause changes, is nuts.”

Demchak’s comments come at a time of debate over whether banks should do more to cut off financing to the fossil-fuel industry, and whether financial regulators should take climate change into account in their oversight of the industry.

Read more:

As banks feel heat on climate change, PNC’s chief executive pushes back

Top banks falling in Texas muni deal rankings due to laws on guns and fossil fuels

Texas Gov. Greg Abbott signed legislation last year requiring banks to certify that they do not have policies discriminating against gun or ammunition businesses before receiving government contracts in the state. Another law goes as far as to punish banks that discriminate against oil and gas businesses.

Because of these policies, JPMorgan Chase and Bank of America have both fallen in the ranking of banks participating in the nearly $60 billion market for Texas municipal financing deals. "It’s fair to say the shake-up in rankings can be attributed to SB 13 and SB 19," said an industry source who asked not to be identified.

The impact of the state’s firearms laws and banks' roles in financing gun makers and sellers has gained more attention after the mass shooting at Robb Elementary School in Uvalde, Texas.

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Banks feel fallout from Texas laws on guns, fossil fuels

New guidelines include climate stress tests for banks

Internationally active banks will soon have to conduct analyses and undergo stress tests related to climate change as part of new guidelines from the Basel Committee on Banking Supervision .

In the U.S. the FDIC and the Office of the Comptroller of the Currency already have similar guidelines. However, with the new Basel guidelines, the FDIC and the OCC are likely to solidify their standards.

“We know that when everyday citizens, families and businesses understand that these climate regulations are going to cost them even a minimal amount of money monthly, that people generally oppose those types of restrictions.” said Joel Giffith, a research fellow at the conservative think tank the Heritage Foundation.

Read more:

Did bank regulators just get a green light for climate stress tests?

Working with fintech CNote, Apple deposits $25 million to minority-owned banks

To spread money among various U.S. depository institutions, Apple is partnering with CNote, an Oakland, California-based fintech firm. Through their platform, Apple placed $25 million of deposits at minority-owned banks, community development financial institutions and other mission-focused lenders.

“Corporations have an enormous opportunity to help communities across the U.S. thrive by changing the way they manage their cash reserves, and we’re excited to see Apple at the forefront of this emerging trend,” said CNote CEO Catherine Berman.

CNote also has partnerships with Mastercard, Netflix, Patagonia and PayPal Holdings. This effort to deposit money into minority-owned banks and CDFIs began in 2020, when George Floyd’s murder opened up discussions about the U.S. racial wealth gap.

Read more:

Apple places deposits at banks catering to the underserved

Study by Bain shows financed emissions account for 95% of all emissions

At the world’s largest banks, financed emissions account for at least 95% of overall emissions, according to a study by consulting firm Bain. While this type of pollution is underreported due to challenges in calculating and disclosing the statistics, corporate clients have been requesting detailed information about emissions in line with their own climate policies.

“Banks have been making net-zero commitments even as the guidance for how they might account for financed emissions across different parts of their loan portfolios is still being defined,” said Michael Kochan, a Bain partner who co-wrote the report.

In the report, of the 45 large banks that Bain reviewed with global representation from the Asia-Pacific, European and North American regions, 65% have made commitments to reach net-zero emissions by 2050.

Read more:

Financed emissions are banks’ latest climate-change challenge

Large bank told not to ban customers from using cards to buy guns

Brian Brooks, acting comptroller of the currency during the Trump administration, recounted that during that time he urged the head of a major bank not to ban its customers from buying firearms with the bank’s cards.

Brooks said he told the unnamed bank’s CEO that it shouldn’t dictate how consumers spend their money. “It’s their own money. You can’t tell them what to buy if it doesn’t violate the law,” Brooks said. “What’s next, you don’t like me reading a right-wing magazine or a left-wing magazine?”

Read more:

Former OCC chief says he urged big bank not to block card purchases of guns