EnergyStatewide NewsBlackRock Says State Pensions May ‘Vote Shares Differently’ Than Suggested, Responding to State Investigation

In its response, the financial company objected to the accusations of oil and gas divestment made by the state attorneys general.
September 7, 2022
The largest portfolio manager in the world, BlackRock, has bent its policy to allow pension funds to “vote their shares differently” than is recommended if the client disagrees with the company.

BlackRock has faced loads of pressure from GOP-led states to alter its course on investment policy, which has supported Environmental, Social, and Governance (ESG) practices.

In a letter to state attorneys general currently investigating the financial titan on those grounds, BlackRock objected to the allegations, but added, “In any event, to the extent our US pension fund clients — including the pension funds in your states — disagree with our analysis, we have now given them the choice to vote their shares differently in many of our investment products.”

An official with BlackRock told The Texan that the policy began earlier this year.

Under its policy, BlackRock handles proxy voting duties for its clients — a practice of voting for corporate governing policies in bulk for all the shares it manages. BlackRock, like any other portfolio manager, is bound to its fiduciary responsibility of looking after its client’s best financial interest, a generally broad requirement that is open to interpretation based on worldview.

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For example, the long-term outlook of a renewable-centric society conflicts with the short-term interest in the financial health of the fossil fuel industry. These two outlooks, along with the medley of spinoffs, compete for the allocation of capital in today’s market and tomorrow’s forecasts.

The investment world has become a new political battleground between left and right-wing worldviews on issues ranging from energy to abortion. Given its sheer size, BlackRock is among the most influential, if not the most influential, in moving capital one way or another.

It openly touts ESG policies on its web page about “sustainable investing.” “Sustainable” is used as a catch-all for “green” energy technologies and progressive-minded social causes.

In its “2030 Net Zero” statement, the company lays out its policy, stating, “Because an orderly transition to net zero by 2050 would benefit the global economy and our clients in aggregate, we believe that by 2030, all issuers would benefit from developing and implementing robust transition plans.”

“As the transition proceeds and issuers and asset owners continue to position themselves in front of it, we anticipate that by 2030, at least 75% of BlackRock corporate and sovereign assets managed on behalf of clients will be invested in issuers with science-based targets or equivalent.”

But BlackRock contends it both conduits capital toward their clients’ best interest of renewable energy technology and doesn’t push those investments at the expense of fossil fuel investments.

“BlackRock does not boycott energy companies or any other sector or industry,” the letter states. “As we have noted previously, BlackRock, on behalf of our clients, is among the largest investors in public energy companies, and has hundreds of billions of dollars invested in these companies globally, with approximately $170 billion invested in US companies.”

Back in March, BlackRock President Rob Kapito said the company had $93 billion of investments in Texas fossil fuel companies. He also touted $264 billion in U.S. fossil fuel companies, about 35 percent more than the current number included by the company in Wednesday’s letter.

As for their emphasis on “climate change,” BlackRock says, “Climate risk and the economic opportunities from the energy transition have become a top concern for many of our clients. … Our role is to offer them data and analytics, investment insights, and thought leadership about the impacts of the energy transition on their portfolios.”

BlackRock was among the 10 entities placed on Texas’ initial list of “fossil fuel divestors” created by the state comptroller after a directive was passed by the Legislature in 2021. That list then triggered the removal of the billions of public pension investments in those companies, a process that is still underway.

State officials said that financial managers, including BlackRock, have told them one thing behind closed doors and signaled to the public another.

This response from BlackRock is the latest in the back and forth between the financial titan and state officials, including Texas’, as these governments ramp up their responses to the ESG movement that is becoming more predominant than just prevalent.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.