September 8, 2022
BlackRock wants to clear the air on “woke” investing.
Yesterday, the world’s largest money manager published a letter pushing back on one it received last month from 19 Republican state attorneys general who accused BlackRock of putting its “climate agenda” ahead of clients, collaborating with climate activists and boycotting energy companies. Tensions between BlackRock and Texas in particular came to a head last month when the state accused BlackRock of boycotting energy companies, violating a 2021 law that aims to protect the energy industry from the growing popularity of climate-minded investing. As a result, BlackRock could be blackballed from managing the billions in retirement funds of Texas government employees.
BlackRock says it’s looking to correct “misconceptions” and “inaccurate statements” about its climate position. In its letter, BlackRock says that the firm has never dictated specific emission targets to any company, and that it doesn’t coordinate its investment decisions or shareholder votes with others on climate issues, as the attorneys general claimed. Far from boycotting, BlackRock says it has invested “hundreds of billions of dollars” in energy companies.
The firm is following a broad trend of policymakers and research when it comes to climate issues, BlackRock says. “Your letter makes several inaccurate statements about BlackRock’s motive for participating in various ESG-related initiatives,” BlackRock writes in the letter, which is signed by the firm’s head of external affairs, Dalia Blass. (E.S.G., or environmental, social and governance, is the latest term for socially conscious investing.) Instead, BlackRock says its shareholder votes and investment decisions reflect that, generally, its investment professionals believe that climate change poses real risks and opportunities for investors. The firm’s belief is “by no means unique,” BlackRock writes.
BlackRock’s tussle with state officials comes at a time when corporate social policies are becoming a campaign issue. Republican legislators in Texas and elsewhere have looked to punish companies that try to reduce the sales of guns, or help their employees gain access to abortions. At the urging of Gov. Ron DeSantis, Republican of Florida, an oversight board voted to ban the consideration of “social, political or ideological interests” when making investment decisions about the state’s pension fund.
Yet fund managers in many red states appear to be backing E.S.G. measures anyway. A recent study from the fund research firm Morningstar found that pension funds in those states had an average support rate of 80 percent for shareholders’ proposals that encourage companies to consider environmental, social and governance issues as well as their bottom lines. For instance, this year, Texas’ Employees Retirement System, the state’s second-largest public pension fund, voted for shareholder proposals that urged big banks to cut off lending to fossil fuel companies.
“Do a lot of red states have the same problem that they point out is an issue among large E.S.G.-promoting asset managers in their own backyards?” Vivek Ramaswamy, the author of “Woke, Inc.”, asks DealBook. “The answer is yes.” He recently started his own fund firm, Strive, which promises to prioritize profit considerations in its investment decisions.