Sunday, October 9, 2022

ICYMI: Louisiana divests nearly $800 million from BlackRock over ESG policies

At our wonderful BLPB conference a week ago (details here), I presented "An Introduction to Anti-ESG Legislation." Thus, news that Louisiana Treasurer John Schroder plans to liquidate all BlackRock investments within three months over Blackrock's ESG policies caught my eye. Here are some notable excerpts from the FOXBusiness article (here) on the news:

Louisiana Treasurer John Schroder penned a letter to BlackRock CEO Larry Fink, explaining the state would liquidate all BlackRock investments within three months and, over a period of time, divest nearly $800 million from the bank's money market funds, mutual funds or exchange-traded funds. The state treasurer blasted Fink's pursuit of so-called environmental, social and governance (ESG) standards that promote green energy over traditional fossil fuels. "Your blatantly anti-fossil fuel policies would destroy Louisiana’s economy," Schroder wrote to Fink in the letter .... "Consumers' Research applauds Treasurer Schroder's commendable decision to withdraw the state's assets from BlackRock's misuse," Will Hild, the executive director of Consumer's Research, told FOX Business in a statement. "As noted in his letter, BlackRock is using the people of Louisiana's money to advance a destructive agenda that raises costs for consumers in the state and across the country. The seeds of today's energy crisis were planted by BlackRock and others in their reckless abandonment of their fiduciary duty [in order] to cozy up to radical, woke politicians," he continued. "We are glad to see the Treasurer working to put an end to their economic vandalism."

You can find the full letter to BlackRock here. Here is a notable excerpt:

[A]ccording to my legal counsel, Environmental, Social and Governance (ESG) investing is contrary to Louisiana law on fiduciary duties, which requires a sole focus on financial returns for the beneficiaries of state funds. Focusing on ESG’s political and social goals or placing those goals above the duty to enhance investors’ returns is unacceptable under Louisiana law. A letter signed by 19 state attorneys general sent to you recently emphasized this same point…. You have admitted that your ESG agenda of forcing behaviors will not increase investor returns. Your 2022 letter to CEOs stated plainly that “We need to be honest about the fact that green products often come at a higher cost.” High cost/low return environmental policies will reduce a company’s profits ... and investors’ returns…. Recently Blackrock set a record for “the largest amount of money lost by a single firm over a six-month period” having “lost $1.7 trillion of clients’ money,” associated with ESG accounts, according to a July 20, 2022 Bloomberg article titled “BlackRock Is Breaking the Wrong Kind of Records.” Such huge losses would seem to indicate that BlackRock is either not focused on investor returns or that its ESG investment strategy is flawed. Neither bodes well for investors…. I’m convinced that ESG investing is more than bad business; it’s a threat to our founding principles: democracy, economic freedom, and individual liberty. It threatens our democracy, bypasses the ballot box and allows large investment firms to push political agendas. It threatens our economic freedom because these firms use their massive shareholdings to compel CEOs to put political motivations above a company’s profits and investors’ returns. Finally, it threatens our personal liberty because these firms are using our money to push their agendas contrary to the best interests of the people whose money they are using!

Stefan J. Padfield | Permalink


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