Two Republican senators expressed concern that Thrift Savings Plan asset managers BlackRock and State Street Global Advisors are putting ESG and their CEOs' "left-leaning" priorities ahead of their fiduciary duties when it comes to proxy voting.
In a letter Thursday to Federal Retirement Thrift Investment Board Acting Chairman David A. Jones, Sens. Pat Toomey of Pennsylvania and Ron Johnson of Wisconsin questioned the priorities of BlackRock and State Street Global Advisors, who between them manage nearly $500 billion for the $762.3 billion Thrift Savings Plan's 6.2 million federal employees and members of the uniformed services. Of that, roughly $57 billion is managed by SSGA.
"We are concerned that BlackRock and SSGA may be prioritizing their CEOs' personal policy views over retirees' financial security," the letter said.
Both firms "are increasingly incorporating left-leaning environmental, social and corporate governance ('ESG') priorities" into their proxy voting guidelines,the senators said. They cited BlackRock's recent voting guidelines to address ESG issues including transition to a low-carbon economy, diversity, equity and inclusion, alignment of companies' political activities and stated policy positions, and shareholder proposals. "Not to be outdone, SSGA's CEO stated 'our main stewardship priorities for 2021 will be the systemic risks associated with climate change, and a lack of racial and ethnic diversity," the letter said.
The senators asked FRTIB and the two managers to brief them by July 26 on their respective proxy-voting policies related to TSP assets, including past communication that could potentially expose a fiduciary conflict.
One specific request was to see any proxy vote within the last five years on a shareholder proposal where BlackRock or SSGA did not vote with management, plus analysis "documenting the anticipated increase in financial return in the investment as a result of such a vote."
The senators also want to know how FRTIB oversees investment managers' proxy voting, and what happens if an investment manager is found to have violated its fiduciary duty. Mr. Toomey is ranking member of the Senate Banking Committee and Mr. Johnson is ranking member of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations.
A call to FRTIB was not immediately returned.
In an emailed statement, a BlackRock spokesman said that BlackRock Investment Stewardship “performs independent research and analysis on behalf of our clients. We cast informed votes aligned with clients’ long-term economic interests. We see this responsibility as part of our fiduciary duty.”
SSGA spokeswoman Olivia Offner said in a separate emailed statement: “We believe that asset stewardship is our fiduciary responsibility and one of the ways we add value for investors. As long-term investors, we always take a broad view of ESG factors as they relate to sustainable returns.”