Are Your Investments Safe from ESG?

The topic for this Constitution Monday is ESG – an acronym for environmental, social, and governance – and its dangers to investors. Even though “asset managers are legally required to act in the best fiduciary interests of their clients,” activist asset managers strive to use clients’ investments to combat climate change, according to Fred Lucas. The same “activist asset managers also push issues such as abortion, race, gender, and political spending.” 

Republican state attorneys for twenty-one states are in the news for striving to protect the savings of Americans. The group was led by Attorneys General Austin Knudsen (Montana), Jeff Landry (Louisiana) and Sean Reyes (Utah). Other attorneys General are from Alabama, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, New Hampshire, Ohio, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wyoming.

The group of state attorneys general published a letter warning the fifty-three top asset management companies that there are “legal perils of focusing on environmental, social, and governance standards, known as ESG.” The companies – including BlackRock, JPMorgan, and Goldman Sachs – “oversee a total of $40 billion in assets.” The letter included the following paragraphs.

We are writing this open letter to asset manager industry participants to raise our concerns about the ongoing agreements between asset managers to use Americans’ savings to push political goals during the upcoming proxy season….

As explained further below, asset managers have committed to use client assets to change portfolio company behavior so that it aligns with the Environmental, Social, and Governance (ESG) goal of achieving net zero [carbon emissions] by 2050…. This specific, political commitment changes the terms of the products offered, as well as engagements with individual companies….

We will continue to evaluate activity in this area in line with our ongoing investigations into potential unlawful coordination and other violations that may stem from the commitments you and other have made as part of Climate Action 100+, Net Zero Asset Managers Initiative, or the like.

The letter continued with a reminder to the asset managers: “at shareholder meetings in 2023, asset managers will need ‘to choose between their legal duties to focus on financial return, and the policy goals of ESG activists.”

I was grateful to see that the name of my investment company is not on the list. You can check the list at this site to see if your investments are safe from ESG activist asset managers.