Silicon Valley Bank’s (SVB) operating practices received considerable attention following the California-based bank’s collapse last week. The banking favorite for a number of tech firms was utilizing racial quotas to meet its human resources needs, recent research showed.
The collapse of SVB was the second-largest bank failure in American history and led to the demise of what had been the nation’s 20th-largest bank. The resulting fallout from the bank failure is still being felt across Wall Street and beyond.
There are many questions about the bank’s practices that led it to this point. As Florida Gov. Ron DeSantis (R) said, some of it could be directly related to the bank’s adherence to Environmental, Social, and Governance (ESG) programming.
According to the bank’s diversity, equity, and inclusion goals, the it hoped to increase women in senior leadership roles to 43% by 2025. It also hoped to increase its Black and Latino members in leadership roles by 2025.
SVB declared that it would rank its use of suppliers based on their gender and ethnic backgrounds, and declared that it would increase the share of such business by 2025. The bank’s report also described women, Black and Latino employees as “underrepresented individuals.”
.@VivekGRamaswamy: Funding ESG Helped Bring Down SVB; Most Clients Don’t Even Know Their Asset Managers Are Investing in Ithttps://t.co/5x5M7xmnst#SVB
— Larry Elder (@larryelder) March 14, 2023
The bank’s agenda went beyond simple racial quotes, including a set of goals that referenced “accelerated commitments.”
The bank stated that regarding gender quotas, “SVB recognizes that this does not reflect all genders including people identifying as trans and non-binary” and stated that it would include “transgender reassignment surgery” as part of its benefits for employees.
The Florida governor said last week, “This bank, they’re so concerned with DEI and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission.”
Last month DeSantis announced that he would restrict the use of such ESG investment using Florida state funds. The governor said that ESG is a “mechanism to inject political ideology into investment decisions, corporate governance, and really just the everyday economy.”
DeSantis’ proposal would restrict banks from using ESG in their investments if they also held public funds. If businesses engage in ESG, they would also be restricted as lenders to either the state of Florida or local governments within the state. The state would bar the use of ESG ratings in determining the state’s ability to pay back its debt.