BlackRock responds to anti-ESG movement, 'disturbed' by trend

BlackRock defended its policies regarding climate risk in a response to a letter from 19 U.S. state attorneys general, and expressed concern over the politicization of public pension plans.

The world's largest money manager released the letter Wednesday from Dalia Blass, senior managing director, head of external affairs, addressed to the 19 Republican attorneys general who had signed an Aug. 4 letter to CEO Laurence D. Fink accusing BlackRock of using "the hard-earned money of our states' citizens to circumvent the best possible return on investment" in its position on energy investments.

Ms. Blass said in the letter the manager's motives for participating in various ESG-related initiatives is the result of its efforts to "realize the best long-term financial results consistent with each client's investment guidelines," and the participation in the initiatives is consistent with their fiduciary duties.

"Given our commitment to those saving for retirement, 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," Ms. Blass said. "Open competition, the free flow of information, and freedom of opinions is core to the strength of U.S. capital markets. It is precisely for these reasons that millions of people have been able to build savings during their working years, invest in the capital markets, and live comfortably in their retirement. BlackRock is proud to play our part in that process."

Ms. Blass pointed out that much of the world has already made commitments to net-zero.

"Governments representing over 90% of global GDP have committed to move to net-zero in the coming decades," Ms. Blass said in the letter. "We believe investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes. These opportunities cut across the political spectrum."

The Aug. 4 letter from the attorneys general was organized by Arizona Attorney General Mark Brnovich, who in a news release of that date said he led the coalition of the 19 states in "calling out its practices of putting leftist politics above investors' interests and returns."

Since that letter, BlackRock came under further fire when on Aug. 24, Texas Comptroller Glenn Hegar included BlackRock on a list of 10 financial companies he has determined "boycott energy companies."

Mr. Hegar is charged with implementing a 2021 state law that restricts the state's pension funds and other state entities from investing in companies that divest from fossil fuels.

In her letter Wednesday, Ms. Blass reiterated prior comments from the company that it "does not boycott energy companies or any other sector or industry."

"As we have noted previously, BlackRock, on behalf of our clients, is among the largest investors in public energy companies, and has hundreds of billions of dollars invested in these companies globally, with approximately $170 billion invested in U.S. companies," she said.

She continued to say that the manager has invested in a broad range of global energy ventures, which "involve a diverse mix of energy sources, including natural gas and renewable sources of energy, as well as decarbonization technology that needs capital to scale. Such a significant investment in, and cooperation with, energy industry companies, ranging from international corporations to entities dedicated to serving local communities in your states, is completely at odds with any notion of a boycott."

Ken Paxton, Texas attorney general, was one of the signatories of the Aug. 4 letter.