A group of 19 Republican attorneys general have written a letter to BlackRock saying the asset manager is using state pension fund assets for environmental, social and governance investments that are “enforcing the phase-out of fossil fuels, raising energy prices, the… fuel inflation and weaken the national security of the United States.”
The eight-page letter describes how the group believes BlackRock is “using the hard-earned money of our states’ citizens to circumvent the best possible return.”
“Our states will not sit idly by and allow our retirees’ pensions to be sacrificed to BlackRock’s climate agenda. It is time for BlackRock to clarify whether it truly values our states’ most valuable stakeholders, our current and future retirees, or risk losses even more significant than those caused by BlackRock’s unworldly climate agenda,” the letter reads .
Attorneys general asked BlackRock to respond by August 19.
BlackRock said in a statement that it manages money on behalf of its clients and helps them manage investment risks.
“The money we manage does not belong to us,” a BlackRock spokesman said in a statement. “It is owned by our clients, many of whom make their own asset allocation and portfolio construction decisions. We offer a range of products and strategies to achieve the desired results. Many of our customers are choosing to invest in a mix of traditional energy companies, natural gas infrastructure, renewable energy and new decarbonization technologies because of the investment opportunities that arise from their critical role in the economy.”
“Earlier this year, we continued to expand client choice by offering interested institutional clients, including all US fixed income clients, the ability to choose their stocks directly. Clients who have entrusted us with $530 billion, more than a quarter of our institutional clients’ equity index assets, have chosen this option,” the spokesperson added.
Texas Attorney General Ken Paxton said in a statement accompanying the letter, “‘ESG’ targets, while purportedly well-intentioned, make little economic sense and have a direct adverse impact on the oil and gas industry and the performance of state pension funds in Texas out. BlackRock’s actions may also violate state and federal laws.”
In their letter, the Attorneys General express their belief that BlackRock’s claimed neutrality on energy investments deviates “materially” from the asset manager’s public commitments to organizations such as the Net Zero Managers Alliance and the goals of the 2015 Paris Climate Agreement.
“The acceleration and implementation of the Paris Agreement objectives across all assets under management through an escalation and alignment strategy is far from neutral,” the letter reads.
The letter also outlines several areas where the attorneys general question whether BlackRock may be violating state laws designed to maximize financial returns for investors, including fiduciary duties of loyalty and diligence.
“The reasons given for your actions in relation to the promotion of net zero, the Paris Agreement or action on climate change indicate rampant breaches of that duty, also known as ‘mixed motives’ actions,” the statement reads Write.
The letter also suggests that BlackRock’s content raises “antitrust concerns.”
“BlackRock’s actions appear to be intentionally constraining and damaging the competitiveness of energy markets,” the letter said. “These antitrust concerns are particularly acute as BlackRock and other asset managers assert their market dominance.”
In addition to Paxton of Texas, signers include Attorneys General from Arizona, Nebraska, Alabama, Arkansas, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Ohio, Oklahoma, South Carolina, Utah and West Virginia.
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Tags: BlackRock, Environment, Social & Governance, ESG, Ken Paxton, Larry Fink