Conservative state treasurers are going to battle against ‘woke‘ Wall Street investment firms they say are squandering American pensions by focusing on climate change when they should be centered on rate of returns.
In a meeting of GOP state financial officers in Washington, D.C., Republican treasurers laid out the strategy for their new battlefront against companies that incorporate environmental, social and governance (ESG) factors into investment decisions for public funds like pensions.
The more than 20 financial officers gathered to hit out against the practice, and touted the $3.5 billion they have already yanked away from firms like Black Rock in just the last six weeks.
BlackRock and other major asset managers have been incorporating ESG investments in a public show of their sustainability commitment that GOP financial officers say shuns U.S. energy but welcomes CCP-linked firms with open arms.
‘While they’re working to bankrupt the coal industry, they’re going off to China and financing coal plants,’ said Nebraska Treasurer John Murante. ‘To me, it’s treasonous activity quite frankly. If American corporations operated in 1940 the way the BlackRock does today, we’d all be speaking German.’
‘It’s massive hypocrisy,’ West Virginia’s GOP Treasurer Riley Moore said in an interview with DailyMail.com.
In a meeting of GOP state financial officers in Washington, D.C., Republican treasurers laid out the strategy for their new battlefront against companies that incorporate environmental, social and governance (ESG) factors into investment decisions for public funds like pensions
BlackRock, the world’s largest asset manager, handles about $10 trillion and is in charge of the retirement plan assets for some 35 million Americans, many of whom have likely given little thought to what the company is doing with their money.
‘I think it’s absolutely un-American. Is there no sense of loyalty to your own people? Just a smidgeon of patriotism for the working class people of this country who happen to power it? You’re okay working in China – which they have a genocide going on with the Uighur population and slave labor- and you’re fine with it?’
BlackRock is also an investor in two companies, Hikvision and iFlytek, that the United States government has backlisted for human rights abuses against Uyghurs in Xinjiang.
BlackRock CEO Larry Finke has long been known to have close ties to China – BlackRock was the first large American investment bank to be granted a license to serve local clients without a partner. Some believe China uses these connections to convince American companies to go easy on the CCP.
BlackRock CEO Finke claims that making investments to prepare for a net-zero emissions economy is the best investment decision
Murante told DailyMail.com that while BlackRock has committed to the ‘virtually impossible’ goal of transitioning the U.S. economic sector away from coal, oil and natural gas, ‘they also go to China and finance new coal-fired plants.’
‘China has more coal plants under construction right now than the US has in operation. They roll out a new coal plant every single week to reduce the cost of energy in their country.’
‘That’s being financed by American corporations who are using American pensions to help pay for that while bankrupting American energy in the US. When the American people find out about that they are outraged.
Moore has led the charge away from these investment firms – in a drastic move recently announcing West Virginia will not do business with firms that do not support the coal industry.
The announcement was the first time a state moved to sever banking relationships with major Wall Street firms over their efforts to fight climate change. For Moore, he says he is simply doing his duty to care for the state’s finances.
‘We generate money from severance taxes – coal gas and oil over $800 million in the last fiscal year. For me to hand that money over to a financial institution that at the same time is trying to diminish those funds through ESG policies, that’s a conflict of interest,’ Moore said.
‘I’m not going to give them money generated from coal while they’re trying to destroy coal. There is a clear conflict of interest and I have a fiduciary responsibility.’
BlackRock CEO Finke claims that making investments to prepare for a net-zero emissions economy is the best investment decision.
‘We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,’ he wrote in his annual letter to shareholders.
In August, Florida Gov. Ron DeSantis followed a number of smaller states in banning ESG considerations for his state’s public pension system. That same month, Texas banned state and local governments from doing business with companies that ‘boycott’ fossil fuels.
But at the same time more than a dozen GOP-led states have passed or brought forth bills to ban ESG-friendly money managers or ban ESG considerations altogether, blue states are equally dedicated to implementing legislation that encourages the consideration of environmental factors in pension investments and restrict public funds from investing in gun companies or polluters.
The U.S. Labor Department, meanwhile, is on track to release a rule that would ease restrictions on green private sector retirement investing. That would reverse a Trump-era rule that restricted investment strategies to financial interests.The Employee Retirement Income Security Act of 1974 defines a strict fiduciary responsibility almost all pension plan professionals have long adhered to.
Some critics of efforts like Moore’s have said they run up again conservative free market principles.
‘What we are doing is actually acting as free market participants and saying here’s our preferences in the marketplace: we want to do business with financial institutions who are not boycotting fossil fuel industry or trying to harm it because that harms us and our tax dollars and our economy,’ Moore shot back.
‘If you’re an asset manager and you’re entrusted with the people of Nebraska’s tax dollars, you have to make decisions in the best interest of people of Nebraska. You have to be apolitical. Our pension funds don’t exist to achieve political ends. So there’s no free market implication here,’ Murante added.
Kentucky Treasurer Allison Ball told reporters she is tasked with making sure the state’s public pensions are invested in a way that gives them the highest rate of return, regardless of climate considerations.
‘What you want is the really solid returns. I’m just not seeing that with this type of initiative. It’s an agenda, it’s an ideology and it’s not really about investment returns,’ she told DailyMail.com.
As of this writing, the S&P 500 ESG index is down about 13 percent for the year, while the S&P 500 energy index is up about 64 percent. Before the past year of energy volatility ESG funds had done much better – the two performed about the same when averaged over five years.
On Monday, Gov. Gavin Newsom wrote an op-ed for Fortune hitting back at conservative broadsides against ESG.
‘It’s a method of investing that prioritizes sustainability, invests in technologies of the future, and factors in the risks associated with climate change–wildfires, floods, hurricanes, and droughts,’ the Democratic governor wrote.
But a number of ESG ratings firms are in charge of deeming the good and the bad, and some GOP state financial officers said that without proper measurement the practice can amount to a ‘marketing scheme.’
For example, Sustainalytics’ ESG risk rating gives Vital Farms, a pasture-raised egg and butter company that preaches its commitment to ‘conscious capitalism’ and ‘ethically produced food from family farms’, a worse score (42.8)than four defense contractors – Northrup Grumman, Raytheon, Lockheed Martin, and Boeing (28.4 to 35).
Their concerns echo those of Tesla founder Elon Musk, who in May tweeted: ‘ESG is a scam.’
‘It has been weaponized by phony social justice warriors,’ he wrote after his electric vehicle company was removed from the S&P 500’s ESG Index in May.