The Fight Against “Woke” Investing Ramps up With Action from State AGs
State Attorneys General are finally taking action against BlackRock and other financial institutions who enforce ESG investing.
ESG means using Environmental, Social, and Corporate governance factors to evaluate the extent to which a company works on behalf of social goals (in this case, liberal goals) that go beyond the traditional role of a corporation.
Proponents claim this approach benefits the environment and maximizes profits for shareholders. In reality, ESG limits investment decisions, furthers the “woke” agenda, and places unrealistic burdens on small companies. It weakens states’ energy industries, tax bases, and job markets and presents a clear conflict of interest in handling taxpayer dollars.
BlackRock – which manages $10 trillion in assets – claims it is doing nothing to limit investment in the fossil fuel industry, but clearly states on its website that climate activism is not only an integral parts of its own mission but is “the shared responsibility of every citizen, corporation, and government.” Already, BlackRock has used its proxy voting power to penalize 53 companies for “lack of progress on climate.” An additional 191 companies were “put on watch” for the same alleged violation.
About a month ago, West Virginia announced a ban against BlackRock and a handful of other financial institutions guilty of ESG investing (click here to read my previous article). The named institutions – JPMorgan Chase, Wells Fargo, BlackRock, Goldman Sachs, and Morgan Stanley – are prohibited from new state business based on a review that found them as having “categorically limited commercial relations with energy companies engaged in certain coal mining.”
The move is expected to cost the banks up to $18 billion annually.
As detailed in my college Joe Gilbertson’s article (click here to read), Florida Governor Ron DeSantis is also taking a stand against “woke” banks through his 2023 proposal to ban financial institutions and credit card companies from discriminating against customers based on religious, political, and/or social policies, prohibit SBA fund managers from considering ESG factors when investing state funds, and force SBA fund managers to prioritize the maximization of return on investment for retirees over all other factors.
“Do we want our society to be governed by some of the most economically elite and powerful interests in society?” asks DeSantis. “I think our economy is going to be much better off if everything is not politicized.”
In mid August, Arizona Attorney General Mark Brnovich teamed up with 18 other state AGs to demand answers from BlackRock regarding its political agenda.
“Based on the facts currently available to us, BlackRock appears to use the hard-earned money of our states’ citizens to circumvent the best possible return on investment, as well as their vote,” wrote the AGs in an eight-page letter. “BlackRock’s past public commitments indicate that it has used citizens’ assets to pressure companies to comply with international agreements such as the Paris Agreement that force the phase-out of fossil fuels, increase energy prices, drive inflation, and weaken the national security of the United States.”
Aside from reduced shareholders profits, the major risk here is that BlackRock’s behavior will become the standard in corporate America with almost no opposition. And regulatory mandates will follow.
“BlackRock’s coordinated conduct with other financial institutions to impose net-zero [carbon emissions] also raises antitrust concerns,” adds the letter.
What we’re seeing here is that companies are choosing to invest in industries favored by politicians rather than act in the fiduciary best interest of their clients. As noted in Brnovich’s letter, this approach is unfair to the many states that invest in BlackRock to maintain public pension funds.
“Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda,” argues Texas Attorney General Ken Paxton. “The time has come for BlackRock to come clean on whether it actually values our states’ most valuable stakeholders, our current and future retirees, or risk losses even more significant than those caused by BlackRock’s quixotic climate agenda.”
In addition to joining Brnovich’s letter, Paxton led a 12-state coalition to challenge the Biden Administration EPA’s push to ban the use of Chrysotile Asbestos (a safe and widely-used chemical compound) and joined an Indiana-led amicus brief asking SCOTUS to review a lower court’s ruling that challenges a state’s right to regulate its own emissions.
Earlier this month, a passively-managed energy index fund called Strive Asset Management went public to offer investors an alternative to ESG funds. In its first week, Strive raised more than $100 million in assets and had $160 million in traded volume.
Sources:
The ESG Investing Backlash Arrives
Paxton Among 19 State Attorneys General Investigating BlackRock for Statements on ESG.
Woke = fools
Unless a company is in the environmental business, such as making solar panels, wind turbines, or involved in some form of cleanup, all they should be doing is following regulations regarding industrial waste or emissions. If that is not sufficient, then obviously the regulations are not sufficient to the task. It’s great for companies to go above and beyond in environmental issues, but unless regulations are ignored, investments should be focused on how efficient and profitable a company is, not how friendly they are to the environment, or how socially aware they might be. Sadly, if a company these days does not have strong posted political views, they seem to be the enemy, and that is now how capitalism was designed.
Alice’s story is based on fear mongering for a meaningless issue intended to rile up the unwoke sheeples who operated on an emotional financial paradigm. Just say woke and they begin to growl. IOW — pandering politicians playing people for profits. Alice jumped right in because she never looks before she leaps. If it’s in the right-wing blogosphere, that’s good enough for Alice.
No one can confirm that Blackrock has taken ESG action against any company, documented or implied, Alice just quotes a couple of right-wing news outlets for that one. Alice does not confirm or source that either.
They complain about the $17T in ESG assets managed by Blackrock and Vanguard. It’s a bald-faced LIE. In Joe’s previous piece on the topic, he got poned when I told him: “Blackrock does manage $10T in assets of which $500B is ESG companies. Vanguard does manage $7.5T in assets of which less than $400B is ESG companies. Do you really think they are forcing ESG at the cost of trillions of non ESG assets? It’s less than 5% of their assets. You need more experience and better research. And how about a sorry, I’ wrong.” Alice, who notes Joe’s piece, apparently didn’t read the comments. Of course she reads little out of her comfort zone of radical right wing propaganda.
Needless to say, Joe never accepted the truth, never apologized, and now Alice takes the story to it’s next step: other people jumping on the fake news bandwagon for political fodder and profit. It’s sad to see these two finance houses being maligned for a 5% issue and it can hurt people. When DeSantis dumped on Disney, their stock plummeted over 20%. Combined with Florida’s terrible response to covid, being the current worst State in the Union for that, losing over 50 citizens a day for month after month after month in the current surge, now it’s the third largest cause of Florida death, Disney traffic is down. Lack of revenue means Florida citizens will lose their Disney jobs,; words do matter.
In Alice’s case, a 5% problem is worth all that. Fake news. Political pandering. Fear mongering. That should be the story.
Fact is, if you wanted to invest in a ESG Mutual from these two leading companies newly vilified by the rabid right, like Alice, I am betting you would be hard-pressed to figure out how. It’s a 5% problem Alice.
Fact is, investment firms offer many “boutique” offers, they are optional, they are documented, you can choose, so why demonize the entire investment portfolio over a 5% issue? Maybe I should sell my Blackrock banking mutual because they have another one for oil? They may have another one for “sportsmen,” which turns out to be guns n bullets. Honestly, investing is hard enough without artificial restrictions of ZERO value Alice is writing about. It’s all just a PR stunt to attract the shills.
Fact is if you perform a financial exorcism of Blackrock and Vanguard you are restricting yourself from $17 trillion in financial opportunities because you don’t like a couple of $800 million offers. Perhaps you will still do OK from this financial self-abuse, but chance are you could have done better by including their non-ESG offers or 95% of their portfolios.
It’s just stupid to restrict financial choices based on politics. It’s a 95% loss for a 5% problem which you can just avoid the mutual, not the company. Matter of fact, I bet that it’s hard to even find the mutual.
Frank you are uninformed. Blackrock requires ALL of its companies to file ESG, and you can bet your ass they don’t invest if you don’t pass. This is real. These are the same guys who invaded exxon’s board and demanded they go green. And they are ripping themselves apart to do it.
Do you homework next time.
Joe, you are uninformed. “Blackrock requires ALL of its companies to file ESG,” says Joe and I am pretty sure he is correct. They ask all companies to file ESG compliance forms. Most firms are not 100% ESG compliant and apparently, Alice and Joe have an issue with knowing that. Undoubtably, they enjoy less transparency in their investment choices.
And then Joe says “and you can bet your ass they don’t invest if you don’t pass. This is real.” Actually, it is not real, it is not true, it is a lie. The invest most of their assets in non-ESG compliant companies. I showed Joe the acid test: only 5% of Blackrock’s assets are ESG compliant. Joe has read this twice but the idiot can neither accept or deny. It was linked, it is sourced. At least deny based on any evidence beyond your own bloviated ideas. In 2021, Blackrock, in writing, expressed the hope that by 2030, their offers would be 10% compliant or over a trillion.
Joe says that’s not true and he can’t offer any evidence to prove it. Believe him.
So, Blackrock asked it’s prospective offers to file ESG compliance paperwork. They also have some ESG-compliant offers. Most of their offers are not ESG compliant but because they ask, their customers will know who is, who isn’t and what that means. Joe thinks that’s just awful and desires not to do business with ESG or the company with only 5% of it’s assets in ESG-compliant companies. How dare they be transparent on pollution. It’s nobodies business but the polluter. Joe’s logic is self-defeating. If a Blackrock offer is ESG compliant, and a great return, Joe would just say no. If a Blackrock offer is 90% ESG compliant, Joe would just say no. Matter of fact, Joe would not purchase even non-ESG compliant Blackrock offers because he is stupid, shortsighted, and an investor who buys based on politics before profits. As I have said from the beginning, that strategy has higher risks and smaller returns than allowing the best offer to be your choice.
And quit hyperventilating. You said: “These are the same guys who invaded exxon’s board and demanded they go green. And they are ripping themselves apart to do it.”
The truth is they backed three board members backed by Hedge Fund Engine Number 1, a dissident group. So did Vanguard and State Street so not exactly a board room invasion by Blackrock. This was indeed a seminal moment in that Engine Number 1 is a nobody, convinced somebody at Blackrock/Vanguard/State Street to join in and then something happened that normally doesn’t. They won.
Bottom line: Exxon stock has risen ever since. Just about doubled in one year. Did not seem to sink the giant.
Sustainable stocks too have outperformed the market, in general.
Just saying that avoiding assets because they are green is not going to be the most optimized strategy for profits, but Joe can invest how he wants. My State, well, that would be a different issue. I, myself, choose to invest in many things, all legal, some downright detestable — I have owned cigarettes, pot, oil, guns, bullets, defense, medical, coal driven power plants, credit cards, and even Chinese homeopathic natural drugs —- that was a real loser. I have never purchased a stock for political or even personal reasons.
Right now it’s just marketing, as I keep telling Joe, as I keep providing evidence too, there just isn’t that much choice out there in ESG funds, non-ESG funds are still everywhere. Even at Blackrock. But it looks good to make positive steps, I agree. The marketing is brilliant if nobody Engine 1 can convince three mega-weight finance houses to do what they never did before — go against management. My first thought in all this is “where the fuck is Fidelity, what are they doing?” That’s some good marketing. I don’t even want it, but I don’t mind knowing. But asking for compliance paperwork and demanding compliance are two different things where Blackrock ONLY does the first. Joe is wrong, they are not demanding anything except compliance in filling out company compliance. The only pass or flunk in that is whether you are in Blackrock’s ESG offer or not. Most are not and I am guessing they don’t care but are looking to see how valuable that might be. Pretty sure Florida and West Virginia investments are not going to change that.
Do you homework next time and please show your work. A source. A link. Something better than “well, everyone knows that” because you got this wrong, I showed you twice, and you keep avoiding the evidence while making up more. I am informed. You avoid information. I did my homework, and showed my work. You have done neither.