BlackRock Pushes Back on GOP's 'Inaccurate' ESG Attacks

Victor J. Blue/Bloomberg

BlackRock Inc. defended its backing of sustainable investing, telling 19 Republican state attorneys general that climate change is a top concern for its clients and a key risk to consider in financial decisions.

"Investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes," Dalia Blass, BlackRock's head of external affairs, said in a letter released Wednesday. "These opportunities cut across the political spectrum."

BlackRock, led by Chief Executive Officer Larry Fink, was responding to an Aug. 4 letter from 19 attorneys general from states including Arizona, Texas and West Virginia. They alleged the firm is pursuing a "climate agenda" at odds with the goal of generating returns for state pension plans.

"Given our commitment to those saving for retirement, we are disturbed by the emerging trend of political initiatives that sacrifice pension plans' access to high-quality investments -- and thereby jeopardize pensioners' financial returns," Blass said in the letter, which sought to rebut "inaccurate" statements about BlackRock's business. 

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The asset manager, which oversaw $8.5 trillion at midyear, asks companies to disclose climate-change information to help make investment decisions, Blass said. The firm doesn't "dictate to companies what specific emission targets they should meet or what type of political lobbying they should pursue."

The Arizona attorney general's office didn't immediately respond to a request for comment on BlackRock's response.

BlackRock has emerged as a top target for Republican politicians campaigning against investments that take into account environmental, social and governance, or ESG, risks. Former Vice President Mike Pence said this year that large investment firms are pushing a "radical ESG agenda," mentioning BlackRock specifically.

Last month, Texas officials added BlackRock to a list of firms they deem hostile to the oil and gas industry, a designation that could cost the asset manager business in the Lone Star State. Republicans in West Virginia have limited BlackRock and other financial firms from handling some state financial business.

BlackRock has sought to show that it's one of the world's biggest energy investors, with more than $100 billion in Texas companies. The company is the second-largest shareholder in Exxon Mobil Corp., with a stake of more than 6%.

Fink said in an interview on Fox Business on Tuesday that BlackRock is one of the biggest investors in gas pipelines around the world, including in Saudi Arabia, Abu Dhabi and Texas.

"We have always believed that any ESG or any energy transition, gas is going to play a central role for the next fifty years," Fink said. "We have to have an effective long-term transition."

(Updates with Fink comments starting in 10th paragraph.)
--With assistance from Amelia Pollard.