BlackRock ‘disturbed’ by anti-ESG movement, slams ‘inaccurate statements’

Firm hits back at ESG backlash in response to letter sent by Republican attorneys general, says efforts limit pensioners' financial returns.

BlackRock has hit back at “misconceptions” and “inaccurate statements” in its response to a group of 19 US attorneys general who said the asset manager might be violating state laws through its membership of climate groups and engagement with energy companies.

Arizona Attorney General Mark Brnovich led the letter, which was sent to BlackRock at the start of August. It said that Republican states “will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda” and that BlackRock’s promotion of net zero indicated “rampant violations” of fiduciary duty.

BlackRock hit back at the claims in a response on Wednesday. The firm said it was “disturbed by the emerging trend of political initiatives that sacrifice pension plans’ access to high-quality investments – and thereby jeopardise pensioners’ financial returns”.

BlackRock said its membership of climate organisations including Climate Action 100+ and the Net Zero Asset Managers Initiative did not mean it was co-ordinating votes or investment decisions and that it had explicitly made this clear when it signed up to Climate Action 100+.

The letter – which was sent close to three weeks after the deadline given in the initial correspondence – also asserted that BlackRock’s voting strategy was designed “with a view to achieving the best long-term value for [energy] companies and their shareholders” rather than to penalise them.

In response to the concerns raised around its voting, BlackRock highlighted the launch of its “voting choice” offering, which allows clients to vote their own shares, including in pooled funds. It emphasised that this offering was available to all public pension funds in the US, including the states represented by the attorneys general.

Finally, BlackRock once again denied that it was boycotting energy companies. The firm listed its recent investments in energy companies – both fossil fuel and renewable – and said it was “troubled” by recent attempts to use anti-boycott laws to limit retirees’ investment options.

BlackRock’s response comes two weeks after Texas announced that the firm had been included in a list of financial companies that were deemed to be boycotting fossil fuels and would be divested by state investment funds. A spokesperson for the firm said that the decision was “not a fact-based judgement” and that it planned to appeal.

BlackRock has been the lightning rod for much of the anti-ESG movement in the US, with West Virginia pulling its funds in January and putting the manager on a list of five firms banned from doing business with the state at the end of July.

This week’s statement is a sign that the asset manager is becoming more assertive in its response to Republicans. In an interview with the Financial Times shortly after the Texas decision was announced, the firm’s head of US, Mark McCombe, blasted the decision as “opportunistic”, “anti-competitive” and “bad for business”.