GOP attorneys general call for BlackRock utilities review over ESG concerns

Citing BlackRock's environmental, social and governance policies, a group of 17 Republican attorneys general on Wednesday filed a motion to intervene with the Federal Energy Regulatory Commission calling on the agency to audit whether the money manager should have blanket authority to obtain more than $10 million in voting securities in multiple utility companies.

"Maybe BlackRock was a passive investor 10 years ago, but today it's an environmental activist," the motion said. "Indeed, BlackRock's own public commitments belie its representations to the commission. Pursuant to its membership in several horizontal associations, BlackRock aims to pressure or force utility companies to phase out traditional energy investment."

The attorneys general take issue with BlackRock's association with "horizontal associations," such as the Climate Action 100+ and the Net Zero Asset Managers initiative.

BlackRock in 2022 obtained a three-year reauthorization to purchase, acquire or take over $10 million in voting securities of any "public utility," "electric utility company," "transmitting utility" or "holding company in a holding company system that includes an electric utility company or transmitting utility," the motion noted. Under the Federal Power Act, any public utility holding company seeking to acquire more than $10 million in voting securities in another utility must secure an order from FERC authorizing it to do so.

Because BlackRock is a part of Climate Action 100+ and the Net Zero Asset Managers initiative, the latter of which as of December had 301 signatories with a collective $59 trillion under management committed to net-zero carbon emissions by 2050, the attorneys general argue that BlackRock is not a passive owner in utility companies.

"These elitists are trying to impose restrictions on energy companies and utilities that would never win approval at the ballot box," said Indiana Attorney General Todd Rokita, a Republican, in a news release. "Their schemes could raise utility bills for regular Americans, including elderly Hoosiers on fixed incomes, and they could diminish the value of investment accounts."

In response to the motion, a BlackRock spokeswoman said in an email that "as a fiduciary, BlackRock's core focus is seeking the best financial outcomes for our clients, consistent with their investment objectives. We continue to offer them choice in financial products, and we are providing the ability for more and more clients to vote their proxies."

The attorneys general who signed onto the motion filed Wednesday were from Alabama, Alaska, Arkansas, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Ohio, South Carolina, South Dakota, Texas, Utah and West Virginia.

A group of attorneys general filed a similar motion in November concerning Vanguard Group. In December, Vanguard left the Net Zero Asset Managers initiative, and in a statement said the move will provide clarity to its investors about the role of index funds and climate-related risks "and to make clear that Vanguard speaks independently on matters of importance to our investors."