A coalition of 19 Republican attorneys general are taking aim at Blackrock, alleging its emphasis on sustainable investments is endangering shareholder returns.
The coalition said in a letter to BlackRock CEO Larry Fink last week that he is jeopardizing the pensions of middle-class workers by pushing environmental, social, and governance (ESG) investment policies, which they allege may be a violation of state, fiduciary and antitrust laws.
Instead of managing state pension funds and finding the best returns on investment, the AGs wrote, BlackRock uses "citizens’ assets to pressure companies to comply with international agreements" such as various climate initiatives.
The Republican AGs, including those from Arizona, Ohio and Montana, Texas and West Virginia, said the letter was triggered by the differences between Blackrock’s public statements and the letter BlackRock Chief Client Officer Mark McCombe sent to many of their state pension funds.
“McCombe’s letter posits that BlackRock is agnostic on the question of energy, and merely offers investing clients a range of investment options in the energy sector. But this claimed neutrality differs considerably from BlackRock’s public commitments which indicate that BlackRock has already committed to accelerate net zero emissions across all of its assets, regardless of client wishes,” the AGs said.
BlackRock issued a statement in response to the AGs' letter, stating that their investors clients are free to choose whether they want to engage in sustainable investing. “We are a fiduciary to our clients, helping them navigate investment risks and opportunities so they can reach their long-term financial goals," the money manager stated. “The money we manage is not our own. It belongs to our clients, many of whom make their own asset allocation and portfolio construction decisions. We offer a range of products and strategies to achieve their desired outcomes. It’s their choice. Many of our clients are choosing to invest in a mix of traditional energy companies, natural gas infrastructure, renewables and new decarbonization technologies because of the investment opportunities stemming from their crucial role in the economy."
The company said the pensions cited by the attorneys general have a direct role in the company's decisions.
“Earlier this year, we further expanded client choice by offering interested institutional clients, including all U.S. public pension clients, the ability to directly vote their shares. Clients entrusting us with $530 billion, more than a quarter of our institutional clients’ equity index assets, have taken this option,” the company said.
“The stated reasons for your actions around promoting net zero, the Paris Agreement, or taking action on climate change indicate rampant violations of this duty, otherwise known as acting with ‘mixed motives.’” the AGs said.
“BlackRock’s commitment to the financial return of state pensions should be undivided," they wrote.