Wall Street Journal, “The ESG Investing Backlash Arrives” (2022)
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On August 15, 2022, The Wall Street Journal published an editorial titled, “The ESG Investing Backlash Arrives,” which featured state AGs’ efforts to push back against BlackRock’s ESG program and the rise of “post-ESG” investment vehicles like Strive Asset Management:[1]
“Recent events show that the backlash against ESG investing has finally arrived…. Arizona Attorney General Mark Brnovich explains how he and 18 other state AGs are seeking answers from the investing giant BlackRock about its political agenda. BlackRock—a titan of passive investment funds—has been a leader in impressing ESG standards on the corporations it invests in.
"The letter is significant politically and financially. These AGs represent states with public pension funds that invest in BlackRock and other funds on behalf of state employees. The states need to know they are getting the best financial returns possible in the market to meet their commitments to retirees….
"'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,' says the AGs’ letter.
"It adds: '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 eight-page letter goes on to ask detailed questions about BlackRock’s relationship with climate-change advocacy groups, its support for net-zero carbon emissions, and how its ESG advocacy conflicts with its fiduciary duty to investors, among other things. The AGs add that 'BlackRock’s coordinated conduct with other financial institutions to impose net-zero also raises antitrust concerns.' …
"Meanwhile, an intriguing new investment alternative to ESG funds has gone public. Strive Asset Management last week announced its first exchange-traded fund, DRLL, a passively managed energy index fund designed to mimic BlackRock’s passive U.S. energy index fund, IYE. Strive says it raised more than $100 million in assets under management and had $160 million in traded volume in its first week.
"We have no brief for any particular business model. Let everyone compete for the investment dollar and see who prevails and offers the best return. But the Strive model is notable because it says it will use shareholder engagement and proxy voting to impress a non-ESG policy on companies. Strive says it will use proxy measures to persuade companies to pursue the overriding goal of maximizing return to shareholders. This is an antidote to the 'stakeholder' model of corporate governance that is the fraternal twin of ESG standards.”
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
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