Too Woke to Fail? ESG and Silicon Valley Bank's Demise

The anti-Environmental, Social, and Governance (ESG) movement is unfolding in many states as part of the new culture wars. When Silicon Valley Bank (SVB) collapsed in March of 2023, ESG was named as the cause. Corporations, particularly those operating in the financial and banking sector, are justifiably concerned about attracting negative attention from the anti-ESG movement. This Article posits that the ESG embraced by the financial sector, particularly by banks operating in the venture capital and startup ecosystem, is both timely and necessary.

Despite the fierce attack against ESG as seen through a series of state laws and regulations passed recently, banks’ ESG efforts should continue to fortify their competitive strength in the global market. Using Silicon Valley Bank as a case study, this Article illustrates that SVB’s integration of ESG in its business and investments was imperative in the bank’s history. Other factors—not ESG—caused SVB’s sudden death. In the wake of SVB’s collapse, other financial institutions should fill the void to serve the climate tech startup ecosystem and strengthen their commitments to ESG.