IN-DEPTH: States Fight ESG Industry, Despite Costs and Long Odds
Conservative States Push Back Against Wall Street’s ESG Agenda
As conservative states push back against the progressive agenda of Wall Street banks and asset managers, some analysts are warning that “anti-ESG” states will pay a price for taking on Wall Street and the ESG industry.
North Carolina State Treasurer Dale Folwell has enacted several measures, including calling on Larry Fink, CEO of BlackRock, the world’s largest asset manager, to resign over what Folwell says is the company’s excessive focus on controversial political causes.
“Why am I spending time on this drama when all I hired this person to do was manage and make us money?” Folwell said. He told The Epoch Times that North Carolina is both a client of BlackRock, having hired them as an investment manager, and a shareholder, owning $55 million of BlackRock shares.
Folwell has also taken back the state’s proxy votes, its rights to vote on the corporate shares it owns, from BlackRock “so that [Fink] can no longer politicize our North Carolina money,” he said. Some of the state’s investments managed by BlackRock are longer dated and cannot be moved to another firm overnight, but Folwell negotiated lower management fees on the funds that remain with BlackRock.
Like BlackRock, many of the world’s largest banks and asset managers have become advocates for the Environmental, Social and Governance (ESG) movement, which calls for financial institutions to use their power to compel companies to get in line behind issues like climate change and social justice.
ESG Conflict Heats Up
State efforts for and against ESG have been heating up recently. In 2023 so far, conservative states have proposed 99 anti-ESG bills, compared with 39 in 2022. Seven became law, 20 failed to pass, and 72 are still pending. At the same time, left-leaning states like New York, California, and Illinois are fighting back to support the ESG industry.
New York City Comptroller Brad Lander wrote in a letter to Fink that “your 2021 letter to CEOs committed to ‘supporting the goal of net zero greenhouse gas emissions by 2050 or sooner’—in line with BlackRock’s pledge as a signatory to the Net Zero Asset Managers Initiative (NZAMI)—and asked businesses to disclose how they are integrating their own net zero plans into their long-term business strategies.”
“Unfortunately, despite these repeated proclamations … BlackRock now abdicates responsibility for driving net zero alignment in its own portfolio by saying that it does not ask companies to set specific emissions targets,” Lander stated.
He suggested that BlackRock could lose the business of New York City’s pension funds if it falters in its support for
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