Alabama Attorney General Steve Marshall signed a letter late last month with several other attorneys general criticizing large financial institutions like BlackRock Inc. for leveraging their capital to push woke environmental and social objectives.
The letter, led by Montana, Utah and Louisiana and signed by 21 state attorneys general in total, was sent to 53 banks, asset management companies and other financial firms. In it, the attorneys general threatened legal action if the firms continue to push their political agendas at clients' expense.
"There has been a growing movement in recent years among powerful interests to use so-called 'Environmental, Social, and Governance' goals to bring about radical political changes without the American people's say," Marshall said in a statement to 1819 News. "This letter is an important reminder that companies that hold themselves out as dispassionate asset managers for millions of Americans are not supposed to be acting as political or social activists. And these managers should not be allowing the vast savings entrusted to them to be hijacked by activists to advance non-financial goals."
Environmental, social and governance (ESG) scoring evaluates how a corporation aligns itself with social goals beyond earning a profit for its shareholders. These goals often pertain to environmental sustainability and advocacy for specific social movements, and commitment to "diversity, equity and inclusion" (DEI).
Organizations, such as MSCI, award ESG scores to corporations supposedly based on their adherence to ESG values. Large asset management groups, such as BlackRock, Vanguard and State Street, and banks, such as JPMorgan and Bank of America, use ESG ratings to choose where to direct capital.
Other critics have called ESG investing a "wokeness report card" and compared it to China's social credit score system.
Marshall has been critical of ESG in the past. He even said last month that ESG scoring could potentially be used to impact the credit ratings of local governments.
In March, Alabama Gov. Kay Ivey joined Florida Gov. Ron DeSantis in opposition to ESG investing in employee pension plans, threatening to block its use in all state and local public investments and ban "social credit scores" in banking and lending.
Though State Treasurer Young Boozer told 1819 News he does not use ESG when determining where to direct public investments under his department, the Retirement Systems of Alabama (RSA), which manages the state's public pension plans, was unspecific as to the role ESG criterion play in its investments.
A spokeswoman for the RSA told 1819 News that the RSA "does not have an ESG plan or use ESG scoring," but the organization might use ESG criteria to the extent that they "impact the profitability of the company and its investment return."
The attorneys general issued the letter ahead of proxy season. During proxy season, companies hold shareholder meetings and vote on company policies.
The attorneys general accused the financial institutions of using ESG to force compliance with environmental goals and race and gender quotas. They also claimed that more abortion-related proposals are on proxy ballots than ever before. If instituted, these could direct political contributions toward pro-abortion candidates.
"The top three asset managers alone cast about a quarter of votes at S&P 500 companies' shareholder meetings," the attorneys general wrote in the letter. "You are therefore not only bound to follow the general laws discussed above but also have extensive responsibilities under both federal and state laws governing securities. Broadly, those laws require you to act as a fiduciary in the best interests of your clients and exercising due care and loyalty. Simply put, you are not the same as political or social activists, and you should not be allowing the vast savings entrusted to you to be commandeered by activists to advance non-financial goals."
To connect with the author of this story or to comment, email will.blakely@1819news.com or find him on Twitter and Facebook.
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