ESG backlash continues with Kentucky list that includes BlackRock

Kentucky state Treasurer Allison Ball released a list of 11 financial companies that includes BlackRock that she said are engaged in "energy company boycotts."

The list is a result of a law passed by the Kentucky General Assembly in 2022 that directs the state treasurer to publish a list of financial companies considered to be boycotting energy companies. According to the law, all companies on the list must "stop engaging in the energy company boycott to avoid becoming subject to divestment," a news release said Tuesday.

BlackRock leads the list, and the other 10 financial institutions are BNP Paribas, Citigroup, Climate First Bank, Danske Bank, HSBC, J.P. Morgan Chase & Co., Nordea Bank, Schroders, Svenska Handelsbanken and Swedbank.

Ms. Ball's list is strikingly similar to a list announced by Texas Comptroller Glenn Hegar in August that included BlackRock on a list of 10 financial companies he has determined "boycott energy companies." The Texas list also includes BNP Paribas, Danske Bank, Nordea Bank, Schroders, Svenska Handelsbanken and Swedbank. Mr. Hegar was 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.

Companies on the Texas list not included on the Kentucky list are Credit Suisse Group, Jupiter Fund Management and UBS Group. Matt Frey, Ms. Ball's spokesman, could not be immediately reached for comment on why she did not include these firms.

Ms. Ball said in her office's news release: "When companies boycott fossil fuels, they intentionally choke off the lifeblood of capital to Kentucky's signature industries. Traditional energy sources fuel our Kentucky economy, provide much-needed jobs, and warm our homes. Kentucky must not allow our signature industries to be irreparably damaged based upon the ideological whims of a select few."

Ms. Ball's office does not oversee any of the state pension funds. She and Attorney General Daniel Cameron, who are both Republicans, sent a letter Oct. 31 to David L. Eager, executive director of the Kentucky Public Pensions Authority, Frankfort. In the letter, Ms. Ball wrote that she had recently asked Mr. Cameron whether investment practices integrating environmental, social and governance practices are consistent with Kentucky law "governing fiduciary duties owed by investment managers to Kentucky's public pensions."

According to the letter, Mr. Cameron said "such practices violate statutory and contractual fiduciary duties." The letter further requested that Mr. Eager advise Mr. Cameron's office about his retirement systems' efforts to ensure that "ESG considerations are not being implemented in your systems' investment decisions, consistent with Kentucky law."

The Kentucky Public Pensions Authority oversees the $7.9 billion County Employees Retirement System, as well as the Kentucky Retirement Systems, which consists of four other state pension funds with a total of $4.6 billion in assets. CERS and KRS have separate boards of trustees that vote on investment decisions.

In a statement, BlackRock said the firm’s “only agenda is delivering the best financial results for our clients. On behalf of our clients, we have invested approximately $276 billion in energy companies globally. BlackRock does not boycott energy companies and will continue to be investors across the energy sector.”