Vanguard and BlackRock Inc., two large asset management companies committed to controversial so-called "sustainable" investing, are the largest owners of Birmingham-based Regions Financial.
Regions lobbied earlier this month to stall legislation in the Alabama Senate that would prevent the state from entering contracts with companies that use political factors to discriminate in business practices and investment decisions.
This bill could keep taxpayer money in the form of government contracts from companies that use environmental, social governance (ESG) scores to determine where to direct capital.
The Alabama Senate passed the bill 27-8 despite pressure from lobbyists from the Business Council of Alabama and Regions. It received a favorable report from the House Financial Services Committee on Wednesday.
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. Some large asset management groups and banks use ESG ratings to choose where to direct capital.
Conservative critics have called ESG investing a "wokeness report card" and compared it to China's social credit score system.
Blackrock and Vanguard are both major players in the push for ESG or "sustainable" investing.
In August, Alabama Attorney General Steve Marshall signed a letter to BlackRock criticizing the large multinational company for using ESG scores in its investment strategy.
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."
Marshall signed another letter in March, again criticizing large financial institutions like BlackRock for leveraging their capital to push woke environmental and social objectives.
Alabama State Treasurer Young Boozer told 1819 News last year that he liquidated a money market mutual fund with BlackRock due to its comparative lack of performance and the company's political involvement.
According to CNN Business, Vanguard owns over 11% of the shares in Regions, and BlackRock owns over 6%. Both own a total value of over $1 billion. Though Vanguard appears to be increasing shares, BlackRock appears to be decreasing them. Another major proponent of ESG, JPMorgan, owns 1.22% of shares in Regions.
Regions has historically defended the ESG agenda. According to its website, Regions believes ESG contributes to its success.
Its website reads: "Regions is committed to our mission to make life better and create shared value. Regions recognizes that the long-term financial performance of our company and our ability to deliver shareholder value are directly tied to the success of our associates, our customers and the communities we serve. We believe that this success stems, in large part, from our continuous improvement efforts related to ESG. For this reason, we believe more than ever that we must consider how ESG matters affect our company and be transparent about our ESG practices and performance. In our ESG reporting, we illustrate how Regions is working to advance our ESG efforts to make life better for our customers, associates and communities, while creating long-term value for our shareholders."
In Regions' 2022 Proxy Statement and Notice, chair of the bank's board of directors Charles D. McCrary touted its ESG report and adherence to standards set by the controversial World Economic Forum.
"The Company enhanced transparency around ESG issues by publishing an expanded ESG Report structured around the World Economic Forum's Stakeholder Capitalism pillars, as well as a Workforce Demographics Report that we will build on for future human capital and Diversity, Equity, and Inclusion (DEI) reporting," McCrary wrote. "Regions led the way among peers with our first standalone Task Force on Climate-related Financial Disclosures (TCFD) Report, covering new ground on climate-related risk and opportunity management and presenting externally assured operational emissions data. The Company achieved previously announced goals around emissions reduction and racial equity commitments and announced new goals related to emissions and sustainable finance, two areas of strategic focus on which Board members are regularly updated."
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