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HB 5240

Financial institutions: banking practices; restriction of services by credit unions based on environmental policies; prohibit. Amends sec. 220 of 2003 PA 215 (MCL 490.220) & adds sec. 401a.

2025-2026 Regular Session Introduced by Joe Aragona and 14 co-sponsors

HB 5240 bans Michigan domestic credit unions from denying or restricting financial services to agriculture producers based on GHG emissions, fossil-fuel inputs, or fossil-fuel mach

bill electronically reproduced 11/06/2025
#agriculture:other #financialinstitutions:bankingpractices
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Bill Summary · HB 5240

HB 5240 — Summary (Credit Union Practices Regarding Agriculture Producers and ESG Policies)

Main purpose
HB 5240 amends the Michigan Credit Union Act to prohibit state-chartered ("domestic") credit unions from denying, restricting, or canceling financial services to agriculture producers on the basis of the producer’s greenhouse gas emissions, use of fossil-fuel derived fertilizer, or use of fossil-fuel powered machinery. The bill also creates a legal presumption against such denials when the credit union has made environmental, social, and governance (ESG) commitments, and establishes civil penalties for violations.

Key provisions

  • Prohibition (new Sec. 401a(1))

    • A domestic credit union may not deny, restrict, or cancel any financial service to an agriculture producer based, in whole or in part, on:
    • the producer’s greenhouse gas (GHG) emissions;
    • use of fossil fuel–derived fertilizer; or
    • use of fossil fuel–powered machinery.

  • Presumption tied to ESG commitments (Sec. 401a(1))

    • If the credit union has made an ESG commitment, its denial/restriction/cancellation of services to an agriculture producer is presumed to violate the prohibition.
    • Examples of evidence of an ESG commitment include advertising, public/private statements/resolutions/reports, or participation in coalitions/initiatives that link business activity to environmental/social/political goals.

  • Rebuttal standard (Sec. 401a(2))

    • A credit union may rebut the presumption only by clear and convincing evidence that the action was based solely on a documented ordinary business purpose, unrelated to any ESG commitment or intent to further environmental/social/political goals.

  • Penalties and enforcement

    • Violation penalty (Sec. 401a(3)): civil fine not more than $10,000 for a domestic credit union violating the prohibition.
    • Sec. 220 (amended): the commissioner may assess fines under the Credit Union Act not to exceed $1,000 per violation generally, but for violations of Sec. 401a(1) may assess up to the Sec. 401a(3) amount (i.e., up to $10,000). Aggregate caps for multiple violations arising from the same transaction (previously $10,000) do not apply to civil fines for violations of Sec. 401a(1).
    • The attorney general may bring actions to collect and enforce assessed fines; proceedings follow the Administrative Procedures Act.

Definitions (selected)

  • "Agriculture producer": a person who owns or operates a farm as defined in Michigan’s Right to Farm Act (1981 PA 93, MCL 286.472).
  • "Environmental, social, and governance commitment": public or private commitments by a credit union (or its board, officers, affiliates) to use market position to reduce/disclose GHG emissions or to meet environmental objectives beyond legal requirements, or participation in initiatives that require customers to meet environmental/social/political goals.
  • "Financial service": broadly defined to include lending, funds transfers, fiduciary activities, trading activities, deposit taking, and similar financial products/services.

Who is affected

  • Directly: domestic (state-chartered) credit unions in Michigan and agriculture producers (as defined).
  • Indirectly: credit union boards, officers, affiliates, and customers whose access to financial services might be governed by ESG-related policies.

Procedural status / timeline

  • Filed: March 14, 2025 (file history includes committee referrals and hearings in early 2025).
  • Reproduced/Introduced (latest): November 6, 2025 by Rep. Sarah Lightner; referred to the House Committee on Economic Competitiveness and read a first time on 11/06/2025.
  • Further committee action and floor consideration pending.

Potential impacts and considerations

  • Limits credit unions’ ability to decline or condition services based on borrowers’ emissions or fossil-fuel inputs, even where institutions adopt ESG or climate-related policies.
  • Creates a presumption favoring agriculture producers whenever a credit union has ESG commitments, increasing evidentiary burdens on credit unions to justify credit decisions on ordinary business grounds (clear and convincing standard).
  • Could increase administrative enforcement and litigation over lending decisions and ESG programs.
  • Applies to state-chartered (“domestic”) credit unions; federal credit unions and other financial institutions are not expressly covered by this bill.

Compiled from official sources — confirm details with the bill’s official record.

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