Republican officials continued their probe of BlackRock this week, saying that the financial giant has not been forthcoming about how climate activists are shaping its policies, according to a letter first obtained by The Daily Wire.
In a letter to BlackRock on Tuesday, 15 Republican attorneys general led by Montana Attorney General Austin Knudsen, demanded more answers from BlackRock about its participation in climate organizations and what kind of environmental, social, and governance policies it has implemented. BlackRock, which has over $10 trillion in assets, has faced scrutiny from Republicans over accusations that it prioritizes leftist activism over customer benefit.
“I have serious concerns about BlackRock’s Environmental, Social, and Governance investments, their conflicting statements regarding ESG, and the potential conflicts of interest with independent fund directors,” Knudsen told The Daily Wire. “Mutual fund directors have a fiduciary obligation to their clients to make them as much money as possible, but BlackRock appears to be more concerned with pushing the woke, liberal agenda.”
The 18-page letter raises concerns about conflicting statements made by BlackRock on ESG, BlackRock’s participation in leftist climate groups, and conflicts of interests.
BlackRock recently stepped away from the Climate Action 100+ organization, but remains in other groups like the Net Zero Asset Managers initiative, the United Nations Principles for Responsible Investment, and Ceres. BlackRock International, a subsidiary, is still part of the Climate Action organization.
Knudson told The Daily Wire that while BlackRock “took a step in the right direction by dropping out Climate Action 100+ earlier this month, it’s not enough.”
“BlackRock has made commitments to environmental activist groups that may conflict with the fiduciary duties it owes to clients, and we seek more information about how the independent directors have overseen this,” the letter says. “Further, BlackRock’s relationships with certain large institutional clients, especially state pension funds, may unduly influence BlackRock’s overall approach to engaging with companies in which it invests, including investments that have disclaimed any reliance or focus on ESG factors.”
The Republicans AGs also say that BlackRock has made misleading statements about the motivations behind its ESG policies. Some comments from BlackRock indicate that it believes that ESG policies provide financial benefit are undercut by other statements that sustainability criteria don’t help assess the potential risk or reward of a fund, the letter notes.
“BlackRock’s claims that its focus on climate and ESG is motivated by concern about financial return are also undermined by the performance of its ESG-managed funds, which lag behind the performance of non-ESG benchmarks while charging higher fees,” the letter said.
Additionally, the letter raises concerns about the independence of mutual fund directors at BlackRock and whether they can be directors on other corporations where BlackRock controls significant shares.
“From a conflict-of-interest perspective, there is a clear risk that service on a public company board creates a dynamic where the director will be hesitant to offend or anger BlackRock, when BlackRock manages, votes, and controls significant shares in that public company,” the letter says.
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In addition to Montana, Alabama, Arkansas, Georgia, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nebraska, South Carolina, South Dakota, Texas, Virginia, West Virginia, and Utah all signed on to the letter.
“Thanks to persistent efforts from Republican attorneys general to defeat the radical and illegal ESG movement, BlackRock and other investment firms have rightly withdrawn from certain environmental organizations committed to a foundational transformation of America’s energy and financial sectors,” Utah AG Sean Reyes told The Daily Wire. “Our coalition, however, still has concerns with BlackRock’s past and present actions involving the financial interests of our constituents. We will remain steadfast in holding BlackRock and others like it accountable by protecting the financial freedom of our people.”
The Republicans previously wrote to BlackRock in July voicing many of the same concerns and received a reply in August. They said that August’s reply did not sufficiently answer their questions or concerns about ESG investing. Tennessee sued BlackRock in December, saying that firm violated consumer protection laws by misleading consumers about its attempt to pursue left-wing social and environmental goals.