Republicans in state capitals across the country are targeting an investing concept known as environmental, social and corporate governance criteria, or ESG for short.
Describing these investment criteria as “woke” and “misguided activism,” GOP officials argue that by taking these factors into account when making investment choices, financial institutions are putting ideology ahead of making money. Experts on this investment criteria say that it’s the other way around and that Republicans are losing money for their constituents by unnecessarily narrowing the options of the financial institutions the state does business with.
Nineteen Republican state attorneys general wrote a letter in August to BlackRock, the world’s largest asset manager, which manages $10 trillion, according to Insider. The letter accuses BlackRock of making decisions based on its alleged political agenda rather than the welfare of state pensions.
“A governance engagement strategy primarily focused on BlackRock’s climate agenda necessarily overlays ESG factors on the core index portfolios that comprise a substantial part of many state pension funds,” the state attorneys general said in their letter. They added, “BlackRock’s commitment to the financial return of state pensions should be undivided.”
Nebraska Attorney General Doug Peterson (Paul Hammel/Nebraska Examiner)
State attorneys general in Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Nebraska and Ohio were among those who signed the Aug. 4 letter.
In its response, BlackRock called the attorneys general statements inaccurate and wrote that “we are disturbed by the emerging trend of political initiatives that sacrifice pension plans’ access to high-quality investments — and thereby jeopardize pensioners’ financial returns.”
The same group of attorneys general along with Virginia’s AG have joined an investigation by the Missouri Attorney General’s Office into whether Morningstar, a financial services company, violated consumer protection law as it evaluated companies’ performance on ESG issues.
Florida Republican Gov. Ron DeSantis has also taken on the issue. On Aug. 23, he successfully pushed through a ban on considering ESG criteria in state pension fund investments.
DeSantis said of his win against ESG investing, “We are reasserting the authority of republican governance over corporate dominance and we are prioritizing the financial security of the people of Florida over whimsical notions of a utopian tomorrow.”
Witold Henisz, vice dean and faculty director of the ESG Initiative at …….