Investment company BlackRock responded to the attorney generals of some conservative states on Wednesday, defending its stance on ESG investing.
The statement comes in response to a letter issued by 19 attorneys general on August 4 criticizing the large multi-national company for its use of environmental social governance (ESG) scores in its investment strategy.
Alabama Attorney General Steve Marshall was one of the names on the letter.
ESG is an approach to evaluating how a corporation aligns itself to social goals beyond earning a profit for its shareholders. These goals often pertain to environmental sustainability but also to advocacy for specific social movements and commitment to "diversity, equity and inclusion" (DE&I).
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.
The August 4 letter accused BlackRock of having "used citizens' assets to pressure companies to comply with international agreements such as the Paris Agreement that force the phase-out of fossil fuels, increase energy prices, drive inflation and weaken the national security of the United States."
SEE ALSO: AG Steve Marshall: ESG 'another mechanism for the left to impose their philosophy'
The letter claimed BlackRock has committed to leveraging its large asset holdings to accelerate net zero emissions against client wishes and boycotted energy companies.
According to the BlackRock website, the company is committed to "supporting the goal of net zero greenhouse gas emissions by 2050 or sooner" in January 2021.
In its response to the letter, BlackRock said it had never forced specific emission targets on any company and doesn't coordinate investment decisions with others on climate issues. The response also claimed that BlackRock has invested "hundreds of billions of dollars" in energy companies.
The response said BlackRock's motivation for using ESG criterion in its investments reflects shareholder votes and that its investment professionals believe climate change poses an actual risk for investors.
SEE ALSO: ESG criteria used for some of Alabama's best-known brand names — 'Important and a factor'
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