Sen. Dan Sullivan said today he plans to introduce legislation targeting the ability of Blackrock, State Street Bank and Vanguard to vote their investors’ shareholder proxies in order to limit their control over markets and industries in the wake of the growing energy crisis.
Sullivan, a Republican from Alaska, argued on CNBC's "Squawk Box" that the federal government and the three big banks’ ESG policies are curtailing oil and gas permitting, transportation, export, investment and lending, which he said hurts not only smaller, independent oil and natural gas companies, but Americans.
Sullivan said he plans to meet with Blackrock CEO Larry Fink in his office today to discuss the impact his mammoth $10 trillion firm was having on America’s energy independence.
“One of the things I’m going to talk to Larry Fink about is legislation I’m getting ready to introduce that would take away the [shareholder proxy voting] ability of passive investor firms’ like Blackrock, State Street, Vanguard. Look at the amount of capital and shares they control—it’s well over $15 trillion. I’m just going to say they shouldn’t be able to vote [investors’[ shares,” Sullivan said.
Sullivan also said he planned to tell Fink that “the whole ESG movement is not reflective of what America wants. There was a poll that said 65% of Americans think we should be producing more oil and gas.”
Sullivan said he believed the average American understands that when you restrict the production of American energy and make it harder to produce, the fallout is “higher prices at the pump, laying off American energy workers and empowering our adversaries.”
The senator billed his legislation as a continuation of the Dodd-Frank curbs on Wall Street influence, which, for instance, took away broker-dealers’ ability to vote the shares of stocks they held in street names.
“Why should these three companies that have monopoly power be able to vote all these shares,” Sullivan asked. “It’s distorted the market tremendously to have these three companies that have massive, massive power. They own 88% of the S&P. That is a distortion of capital markets and it reflects on the energy policies we are talking about.”
The willingness of even large pension plans to allow Blackrock and other big banks to vote their proxies gives them enormous power over industries and markets, studies suggest.
Shareholder rights activists have criticized the index fund giants from a different perspective, arguing they usually side with managements. For instance, in the 2020-2021 proxy season, Blackrock voted for a dissident director candidate in only two of 14 contests, or roughly 14.3% of cases, down from backing dissidents in three of 12 contests, or 25%, in the 2019-2020 season, according to research firm Insightia.