In the latest salvo of what is becoming an intense and protracted debate, BlackRock published a letter in response to the one it received in August from 19 Republican state attorneys general attacking the investor for acting on its ” quixotic climate agenda” rather than maximizing financial return for clients. The letter accused BlackRock of acting with “mixed motives” regarding climate change, noting that whether this arises from “a desire to save the world or attract investment from European or left-leaning pension funds” is irrelevant, as “state pensions must be invested only to earn a financial return.” Importantly, the letter also accused BlackRock of boycotting energy companies, an accusation echoed by Texas (which could lead the state to boycott BlackRock in return).
The BlackRock response, meanwhile, reiterated the investor’s view that focusing on climate risk will in fact generate better long-term financial outcomes and that “climate change is testing the resilience of many industries and businesses.” The letter provides a number of citations to research showing the link between climate and investment risk, bolstering its claims that climate disclosures are relevant to investors, but also stating unequivocally that BlackRock does not boycott energy companies (i.e., voting against management on climate issues does not constitute a boycott).
The BlackRock letter was quickly followed by a similar memo signed by 13 state treasurers including New York, Illinois, Wisconsin and Massachusetts in response to state legislation aiming to prevent investors from considering ESG. Claiming that the “backlash” is politically motivated and fails to recognize that “climate change is real…a true business threat for us all,” the letter suggests that if the divide continues, “there will be two kinds of states moving forward: states focused on short term gains and states focused on long term beneficial outcomes for all stakeholders.”