Republican State Treasurer Todd Russ of Oklahoma sent a letter to over 100 financial institutions to determine if their Environmental, Social and Governance (ESG) policies disqualify them from working with the Oklahoma government, Russ’ office announced Wednesday.
Companies will have until March 31 to respond to a series of 19 questions that the state of Oklahoma will use to determine if the company is violating Oklahoma law by engaging in a boycott of energy companies, according to the letter obtained by the Daily Caller News Foundation. Russ specifically mentioned BlackRock, the world’s largest asset manager and frequent target of GOP criticism for its consistent support of ESG investing, which Republican critics allege violates its fiduciary duty to its clients, in a statement to the DCNF.
“This list is crucial to provide accountability for our government entities, including organizations responsible for pension funds such as the Oklahoma Public Employees Retirement System (OPERS), Teachers Retirement System (TRS) to ensure our constituents’ tax dollars are only invested in secure and verified financial companies that comply with Oklahoma law,” Russ told the DCNF. “OPERS alone has more than 60 percent of their portfolio totaling more than $10 billion managed by Blackrock, a well-known adversary of energy businesses.”
New York City Comptroller Brad Lander speaks during a “Defend Democracy” rally, taking place on the first anniversary of the January 6, 2021 attack on the U.S. Capitol, in Brooklyn, New York, U.S., January 6, 2022. REUTERS/Brendan McDermid
The debate around financial managers’ use of ESG policies has intensified in recent months, as several Republican states pulled billions from BlackRock. The company was also among those who received a letter from Democratic New York City Comptroller Brad Lander, who threatened to pull $43 billion from the firm, and more from others, if they failed to support shareholder resolutions that promoted “net zero” investment strategies.
BlackRock CEO Larry Fink took the stance that “climate risk is investment risk,” in a 2022 letter to CEOs. In that letter, Fink criticized the characterization of his firm’s investment strategies as “woke,” arguing that the company supported environmental goals “not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients.”
ESG funds tend to underperform compared to non-ESG funds held by the same asset managers, while charging higher rates, according to a study of 147 self-identified ESG funds in the U.S., conducted by researchers at the London School of Economics and Columbia Business School. The authors also found “no evidence” that ESG funds tended to invest in companies that were more compliant with environmental regulations.
“BlackRock’s sole focus is delivering the best long-term financial results consistent with our clients’ investment goals,” the company said in a statement to the DCNF. “We do not boycott energy companies, as demonstrated by over $200 billion of investments in US traditional energy companies made on behalf of our clients. We look forward to engaging with the Oklahoma Treasurer to discuss how BlackRock serves our clients’ interests in Oklahoma and elsewhere, including over $20 billion of investments in Oklahoma-based public companies made on behalf of our clients and managing public pensions for more than 73,000 Oklahoma beneficiaries.”
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