September 9, 2022
BlackRock is refuting what it calls ‘inaccurate’ claims by a coalition of Republican attorneys general that the money manager’s ESG investing policies sacrifice investor returns and violate the firm’s fiduciary duty.
On August 4, Arizona Attorney General Mark Brnovich and 18 other conservative attorneys general sent a letter to BlackRock chief executive Larry Fink accusing him and his firm of ‘putting leftist politics above investors’ interests and returns.’
A letter released Wednesday by BlackRock’s head of external affairs Dalia Blass responds to that accusation and explains that BlackRock’s motivation for participating in ‘various ESG-related initiatives’ is not driven by politics, but in fact by financial performance.
‘We believe investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes,’ BlackRock’s letter states, noting that governments comprising more than 90% of global GDP have committed to shifting to net zero energy policies in the future.
Among BlackRock’s ESG-related policies is its participation in the Taskforce on Climate-Related Financial Disclosures, which asks companies to submit detailed disclosures on the environmental impact of their operations. BlackRock argues this is an effort to enhance transparency for risk assessment purposes, and denies that it dictates emissions targets or political lobbying strategies for companies it invests in.
Ironically, BlackRock’s statements seem to align perfectly with Attorney General Brnovich’s statement in a news release that ‘a fiduciary responsibility requires putting your client’s best interests ahead of any political agendas.’ The disconnect, it would seem, is that ESG critics including the aforementioned attorneys general appear to believe that climate change is not a pecuniary issue. BlackRock disagrees, but argues it has not limited clients, including pension fund clients, from investing in legacy oil and gas companies if they so choose.
‘BlackRock’s belief that climate risk poses investment risk is backed by our publicly-available research,’ the firm wrote. ‘We also understand, however, that these views are not universal. For this reason, we offer clients a broad choice of investment products … that allow clients to gain broad market exposure, including to energy companies, and to make energy-specific investments.’
BlackRock’s letter further states that firm leadership is ‘disturbed’ by the emerging trend of red states politicizing pension plans and ‘troubled’ by their efforts to use anti-boycott statutes to limit what kinds of strategies retirees can invest in.
Last month, Texas Comptroller Glenn Hegar banned BlackRock and nine other asset managers from handling pension funds for the state after determining that the firms ‘boycott’ oil and gas companies – West Virginia previously did something similar – and ordered state pension funds to divest from about 350 ETFs and mutual funds found to have an ESG tilt.
In its letter, BlackRock once again categorically denied that it boycotts oil and gas companies, or companies in any sector, and asserted that it currently has roughly $170bn invested in US energy companies, including in states that have been hostile to the firm. Texas Attorney General Ken Paxton was among the 19 signatories of Brnovich’s August 4 letter.
BlackRock is refuting what it calls ‘inaccurate’ claims by a coalition of Republican attorneys general that the money manager’s ESG investing policies sacrifice investor returns and violate the firm’s fiduciary duty.
On August 4, Arizona Attorney General Mark Brnovich and 18 other conservative attorneys general sent a letter to BlackRock chief executive Larry Fink accusing him and his firm of ‘putting leftist politics above investors’ interests and returns.’
A letter released Wednesday by BlackRock’s head of external affairs Dalia Blass responds to that accusation and explains that BlackRock’s motivation for participating in ‘various ESG-related initiatives’ is not driven by politics, but in fact by financial performance.
‘We believe investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes,’ BlackRock’s letter states, noting that governments comprising more than 90% of global GDP have committed to shifting to net zero energy policies in the future.
Among BlackRock’s ESG-related policies is its participation in the Taskforce on Climate-Related Financial Disclosures, which asks companies to submit detailed disclosures on the environmental impact of their operations. BlackRock argues this is an effort to enhance transparency for risk assessment purposes, and denies that it dictates emissions targets or political lobbying strategies for companies it invests in.
Ironically, BlackRock’s statements seem to align perfectly with Attorney General Brnovich’s statement in a news release that ‘a fiduciary responsibility requires putting your client’s best interests ahead of any political agendas.’ The disconnect, it would seem, is that ESG critics including the aforementioned attorneys general appear to believe that climate change is not a pecuniary issue. BlackRock disagrees, but argues it has not limited clients, including pension fund clients, from investing in legacy oil and gas companies if they so choose.
‘BlackRock’s belief that climate risk poses investment risk is backed by our publicly-available research,’ the firm wrote. ‘We also understand, however, that these views are not universal. For this reason, we offer clients a broad choice of investment products … that allow clients to gain broad market exposure, including to energy companies, and to make energy-specific investments.’
BlackRock’s letter further states that firm leadership is ‘disturbed’ by the emerging trend of red states politicizing pension plans and ‘troubled’ by their efforts to use anti-boycott statutes to limit what kinds of strategies retirees can invest in.
Last month, Texas Comptroller Glenn Hegar banned BlackRock and nine other asset managers from handling pension funds for the state after determining that the firms ‘boycott’ oil and gas companies – West Virginia previously did something similar – and ordered state pension funds to divest from about 350 ETFs and mutual funds found to have an ESG tilt.
In its letter, BlackRock once again categorically denied that it boycotts oil and gas companies, or companies in any sector, and asserted that it currently has roughly $170bn invested in US energy companies, including in states that have been hostile to the firm. Texas Attorney General Ken Paxton was among the 19 signatories of Brnovich’s August 4 letter.
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