August 18, 2022

Here Comes the ESG Backlash

BlackRock is a woke force to be reckoned with in asset management, but others are growing tired of the firm’s heavy-handedness.

ESG, which is wokespeak for Environmental, Social, and Governance responsibility, is also the Left’s weapon for getting corporate America to bend to its socialist will without all those pesky voters and legislators getting in the way. It goes beyond virtue signaling, because it strategically uses muscle to force corporations to engage in woke practices such as indoctrinating employees in critical race theory and promoting climate change ideology.

ESG is not to be ignored or taken lightly — especially if you’re wondering why fuel is in such short supply and at record high prices. ESG had a hand in that. Puzzled at how such a discredited and overtly racist concept as critical race theory is part of corporate employee training? ESG’s there, too. Scratching your head at how a major investment firm like BlackRock can almost single-handedly push corporate America into accepting a pledge to become carbon net-zero in less than 30 years? That’s ESG on steroids.

The ESG movement, though, isn’t fueled by some run-of-the-mill group of activist investors that likes to sow chaos at stockholder meetings or weasel its way onto corporate boards. BlackRock is a financial force to be reckoned with, having nearly $10 trillion in assets under management across several economic sectors, particularly energy.

BlackRock is working closely with climate advocacy groups to push a net-zero energy transition among American companies in the shortest time possible. Last year, it used its muscle to push a slate of climate activists onto the board of energy giant ExxonMobil. That’s just one example of its efforts to get corporations to support its climate agenda. Others include dubious board votes, disinformation campaigns, and bullying. Its true-believing climate advocacy partners don’t even care if they lose money in the process.

Like similar ESG-embracing money managers, BlackRock also has several public sector retirement funds under management. That’s why the asset manager is now under the scrutiny of attorneys general from 19 states.

It started with a letter BlackRock recently sent to several state pension and retirement funds — a letter outlining its commitment to making money for its clients, allowing clients to chart their own path to the “energy transition,” and assuring them that BlackRock’s connection to climate organizations is simply dialogue.

Arizona Attorney General Mark Brnovich and AGs from 18 other states sent an eight-page letter to BlackRock CEO Larry Fink on August 4 in response. The letter bluntly states, “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.”

It continues, “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.”

The letter takes apart BlackRock’s statements and matches them to its actions. The firm’s practices don’t hold up well, and it may find many of those questions hard to answer — or at least hard to answer without admitting to breaking the law and its oath to protect the fiduciary interests of its clients.

BlackRock insists that it’s acting only in the interest of its clients, but if most of its clients aren’t motivated entirely by climate change advocacy, then that’s a disingenuous and demonstrably false statement.

Woke investment funds don’t have to be the only game in town, though. The backlash against ESG has led to a market for investors who want to put their money into an entity that is first and foremost financially motivated, not politically so. Yes, that’s Adam Smith’s invisible hand at work.

Enter Strive Asset Management, whose first offering hit the stock exchange last week. Strive CEO Vivek Ramaswamy stressed that the asset manager’s mission “is to restore the voices of everyday citizens in the American economy by leading companies to focus on excellence over politics.” While ESG funds promote left-wing values, Strive will promote making money.

After all, that’s what investors are supposed to do. Hopefully, this newfound resistance to ESG will lead to more of the same.

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