American Financial Titans Are Straying From Green Investment Strategies As GOP Pushback Mounts, Report Finds

American Financial Titans Are Straying From Green Investment Strategies As GOP Pushback Mounts, Report Finds

Nick Pope on August 1, 2023

• Major U.S. asset managers have supported a smaller share of resolutions focused on climate since 2022, when Republicans at the state level and in Congress significantly increased their opposition to environmental, social, and governance (ESG)-focused investment practices, according to a new report by InfluenceMap.
• The average U.S. asset manager supported just 36% of climate-related resolutions in 2022, down from 50% the year prior, according to the InfluenceMap report.
• “In our view, others failed to recognize the progress already made by companies such that they had largely met the ask of the proposal, particularly relating to the management of climate-related risks and opportunities,” a BlackRock spokesperson told the Daily Caller News Foundation.

Several leading American asset managers have decreased their support for environmental, social and governance (ESG) resolutions since 2021, according to a new report by InfluenceMap, a nonprofit that tracks climate policies in Western corporations.

InfluenceMap’s report assigned BlackRock, Vanguard, State Street and Fidelity environmental stewardship grades of C+ or lower, which indicates that each firm exhibits “a lack of effective climate stewardship processes and use of shareholder authority to engage companies to transition” to a green energy, net-zero carbon emissions future. The report also noted that 2022 saw a “considerable” drop in corporate support for ambitious green shareholder resolutions, a development that coincides with increased Republican scrutiny of corporate ESG policies and mandates.

The average asset manager supported 35% of “climate-relevant” resolutions in 2019 and 61% in 2021, but support levels among U.S.-based asset managers dropped back down to 36% in 2022 from 50% in 2021, InfluenceMap’s analysis found. There is a “significant gap” between the long-term climate commitments of asset managers and the short-term actions they have taken, the report also found

The report analyzed $16.4 trillion of investments in the portfolios of 45 of the world’s largest asset managers, primarily from the U.S., Europe and Japan. Up to 95% of the portfolios reviewed were not aligned with the tenets of the Paris Climate Accords, and the sampled portfolios held almost three times as much equity value invested in fossil fuel-related interests than in green energy.

Congressional Republicans significantly increased their scrutiny of ESG-related policies and practices in 2022, with lawmakers blasting the practice as a “scam” that unnecessarily injects political concerns into business operations. In July, Republican Rep. Jim Jordan of Ohio and several of his colleagues initiated an investigation into the ESG policies and practices of BlackRock and Vanguard.

Numerous Republican governors have targeted ESG investment practices in the same period of time, with Florida Gov. Ron DeSantis organizing a coalition of 18 governors in March to fight ESG policies. West Virginia officials effectively blacklisted five major U.S. financial institutions in July 2022 from doing business in the state, citing their corporate support for “boycotting” fossil fuel investments.

BlackRock CEO Larry Fink said in June that he no longer favors the term ESG because it has been “politicized,” about nine months after he remarked that spiking energy prices are “accelerating” the green energy transition.

“In our view, others failed to recognize the progress already made by companies such that they had largely met the ask of the proposal, particularly relating to the management of climate-related risks and opportunities,” a BlackRock spokesperson told the DCNF. “Even where we agreed with the issue in focus, we did not consider it appropriate to support the proposal given our view that the outcome, if it passed, would not align with the financial interests of BlackRock’s clients as long-term investors.”

InfluenceMap’s report follows July reports that several major American companies, including BlackRock, had quietly reduced the visibility of their commitments to internal ESG policies on their websites, a practice known as “greenhushing.” BlackRock also announced in July that Amin Nasser, CEO of the world’s largest oil company, Saudi Aramco, had joined its board of directors.

“As one of the largest asset managers in the world, State Street Global Advisors is committed to our fiduciary duty to clients,” a spokesperson for State Street told the DCNF.” As part of this responsibility, we will continue to engage with portfolio companies on material risks and opportunities that could impact the long-term value of our clients’ assets.”

Vanguard and Fidelity did not respond immediately to the DCNF’s requests for comment.