Questions about fiduciary responsibility and international accounting standards?
Long time coming….
Why, oh why, has it taken so long to begin the energy discussion about fiduciary responsibility and international accounting standards?
Until we work out the measurement and verification protocol, ESG is a work of fiction of unknown value.
………
“The WSJ writes, recent events show that the backlash against ESG investing has finally arrived. No less than 19 state attorneys general are seeking answers from the investing giant BlackRock about its political agenda. BlackRock has been a leader in impressing ESG standards on the corporations it invests in.
https://www.ai-cio.com/news/19-gop-attorneys-general-slam-blackrock-over-esg-investments/
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 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.
The ESG movement has infiltrated investment standards with little scrutiny for several years, led by BlackRock CEO Larry Fink. Former BlackRock execs such as White House economic policy chief Brian Deese also have influence in the Biden Admin.
The risk is that ESG measures that Fink and others claim are voluntary will become standard with almost no debate. The next step is likely to be regulatory mandates. The U.S. Securities and Exchange Commission has already proposed a climate-change rule that would impose a vast new mandate across the US economy for reporting CO2 emissions.
BlackRock for its part insists that it is merely looking out for the best interests of investors, and that a concern for issues like climate and social equity are a vital part of that mission. This debate is important because the political allocation of capital is an increasingly large problem. It steers investment from its highest potential return toward companies or industries favored by politicians.
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 US energy index fund, IYE.
Strive will use shareholder engagement and proxy voting to impress a non-ESG policy on companies. This means proxy measures to persuade companies to pursue the overriding goal of maximizing return to shareholders—an antidote to the “stakeholder” model of corporate governance that is the fraternal twin of ESG standards.
To Sum It Up: It looks like the US may finally get a real debate over ESG and politicized investment. It's about time.
Our Take: Expect some Grade-A sophistry as BlackRock's lawyers, in their response, no-doubt try to argue that capital allocation demands the heavy hand of Wall Street asset managers who know what's best for mankind—even as they fail to understand and adhere to their most basic fiduciary duties.
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#ESG #investing #capitalmarkets”