Asset managers like BlackRock have lost credibility on ESG or Environmental, Social, and Governance investing. BlackRock has joined climate change initiatives, committing to pressure companies to reach net-zero greenhouse gas emissions. But when 19 attorneys general (co-led by Nebraska) questioned whether these commitments were legal, BlackRock said it hadn’t followed through on them. Fellow climate initiative member, New York City Comptroller Brad Lander, has inquired about this “fundamental contradiction between BlackRock’s statements and actions.” Asset managers have a serious trust problem when investors managing billions of dollars can’t get a straight answer.
Lander’s thorough letter may be the definitive description of ESG investing. He explains that New York City pension funds work for the benefit of “our planet,” and make investment decisions “to limit global temperature rise below 1.5 [degrees].” Goals like achieving net zero are designed to “confront the climate crisis head on.” Clearly, ESG requires a dual purpose to pursue both investment returns and environmental goals like net zero. Lander’s candid letter illustrates my concerns about ESG.
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