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New ESG social credit system coming soon, experts warn

Banks, financial institutions becoming 'new legislatures'

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Yudi Sherman

Yudi Sherman

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June 13, 2022

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10:04 AM

New ESG social credit system coming soon, experts warn

Bloomberg is not happy with today’s investors. 

In an article last week titled “Bond Investors Still Buy Debt From Nations With Lower ESG Scores Than Russia,” Bloomberg’s Greg Ritchie laments that “ethical investors aren’t learning the lessons” they were supposed to and are still investing in 15 countries that have lower ESG scores than Russia. 

Environment, social and governance (ESG) is a form of grading companies and countries by how compliant they are with moralistic criteria. For example, the more environmentally friendly or racially inclusive a company purports to be, the more virtuous it is and thus more worthy of investment. And if a company’s ESG score is below virtue-signaling levels, they are not to be invested in at all. 

In May, America’s Frontline News reported that the S&P 500 ESG Index, a stocks index which scores companies based on ESG criteria, excluded Tesla Inc despite the company being one of the world's largest and most environmentally friendly car makers. The index claimed Tesla Inc had “two separate events centered around claims of racial discrimination” and poor working conditions, which gave it a low score. The move came as Tesla CEO Elon Musk announced becoming a Republican. 

The S&P 500 ESG Index does list ExxonMobil, an oil corporation known to be environmentally sinful. 

But it may not be just companies and countries subjected to ESG. Experts are warning that individuals may soon be graded on their ESG compliance in a model similar to the China Communist Party’s social credit system; except in the U.S., the government won’t need to mandate it. Institutions will enforce ESG behaviors voluntarily.  

“I think it is highly likely that within the next two years, you’re going to see financial institutions start to use a personalized social credit score of some kind to make decisions about things like your access to loans, your interest rate, or whether you’re eligible for insurance coverage,” said Heartland Institute Director Justin Haskins, according to an analysis Monday by The Epoch Times. “All the signs are pointing to that happening very soon,” he said. 

American Legislative Exchange Council Chief Economist Jonathan Williams predicts that if enough progressive pressure is brought to bear on the financial system, it would mean “having people’s freedoms eroded without any legislation ever having to be passed, whether it’s companies with a radical take on ESG or FICO personal credit scores.” 

Indeed, the consumer credit rating agency FICO openly said in December that personal ESG scores will soon be enforced, stating that “one example would be the inclusion of property energy ratings data in mortgage valuation and decisioning.” In other words, consumers who pay their debts and have excellent financial credit may have trouble getting a mortgage, car loan, bank loan, or credit card if they are not environmentally conscious.  

According to New Hampshire State Rep. J.D. Bernardy, financial institutions are becoming “our new legislatures.” 

“They can’t pass the Green New Deal in the United States Congress,” said Bernardy, “but the banks can certainly implement it. The major banks, financial management firms, and insurance companies are de facto deciding how we will be able to live. They are becoming our new legislatures.”   

BlackRock CEO Larry Fink, who heads one of the world’s largest investment firms, was candid about how the company approaches ESG. 

“You have to force behaviors, and at BlackRock, we’re forcing behaviors,” said Fink in 2017.   

Two years ago, the mere suggestion that banks and other corporations would refuse service to individuals based on their carbon footprint would have been dismissed out of hand as a conspiracy theory.  

But COVID-19 vaccine mandates have proven that even when not under legal pressure, many companies are more than willing to discriminate against prospective customers if public sentiment is strong enough. As of May 2022 four out of ten companies still impose some kind of vaccine mandate, reports Bloomberg Law. 

That may be why Chase Bank felt comfortable closing former Trump national security adviser Lt. Gen. Michael Flynn’s bank account in 2021 due to “reputational reasons”, according to The Heritage Foundation. Chase's decision followed an earlier decision by Wells Fargo to close the bank account of 2020 Delaware Republican Senate Candidate Lauren Witzke. Bank of America, of its own volition, decided to track its customers who may have been at the Capitol on January 6, 2021, and report them to the FBI. Following the Capitol breach, payment processor Stripe stopped processing payments for Trump’s campaign and anyone who was at the Capitol that day. 

Here’s how they’ll do it 

As early as 2019, the World Economic Forum was already gushing about a new credit card by Doconomy – in partnership with MasterCard – that tracks the carbon footprint of customers’ purchases and cuts off their spending once they reach their “carbon max”. 

But ESG tracking won’t be limited to financial transactions. Individuals’ movements will be tracked as well. 

At the World Economic Forum (WEF) Annual Meeting 2022 in Davos last month, Chinese tech giant Alibaba Group CEO J. Michael Evans revealed that the company is developing the tech framework to monitor each individual’s carbon footprint wherever they go and that the platform will also reward people for green travel.   

“So we have within our business something called ‘AMAP’, which is a mapping – think Google Maps or Waze – plus travel destination business,” explained Evans during a panel called Strategic Outlook: Responsible Consumption. “And so what we’re going to do is first allow people to calculate the best route, the most efficient route, and the most efficient form of transportation and then if they take advantage of those recommendations, we will give them bonus points that they can redeem elsewhere on our platform.  

“So they are incentivized to do the right thing even if they were provided the opportunity to do the wrong thing.” 

For now, all these carbon trackers are voluntary. But the WEF is working towards changing that. 

“Polluters will have to pay to emit carbon dioxide,” says the WEF as one of its eight predictions for 2030. “There will be a global price on carbon.” 

That price has already been set as $51 per carbon ton by the Biden administration’s “social cost of carbon” initiative, which was upheld by the United States Supreme Court last month. 

Dr. Aaron Kheriaty illustrated what this ESG credit system may look like in the near future. 

“Imagine a few years hence you receive the following text on your phone,” he wrote on Twitter.  

“A notification explains that your carbon footprint is 23% above others in your age/race category in your geographic region. It informs you that you have eighteen months to transition to an electric vehicle; otherwise, you will be taxed an additional $0.90 per gallon of gas. While that gas tax is steep, you default to that ‘option’ because you cannot afford an electric vehicle. After another six months, you receive another notification that your individualized carbon footprint tax will double to $1.80 per gallon of gas...which hurts even more but does not change your financial prospects for a new electric car. A year later, an algorithm in the cloud decides that, since you have still not converted to an electric vehicle, you now simply cannot buy gas.”   

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