Twenty-one attorneys general across the country have raised concerns regarding Environmental, Social and Governance (ESG) investing, which “screen[s] investments based on corporate policies to encourage companies to act responsibly.” The primary concern is that asset managers will use their clients’ investments to adhere to ESG-approved corporations, rather than focusing on the initial commitment to the client and acting in their best fiduciary interest.
“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,” the 21-page letter reads.
The environmental portion of ESG standards evaluate how “a company safeguards the environment” through their policies, specifically regarding climate change. It also considers the social efforts of the company, which often includes “political issues such as abortion, race, gender, and political spending.” The last facet of ESG standards look at governance, which overviews the leadership of the company, how much they are paid, audits, shareholder rights, etc.
“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,” the letter continued. “This specific, political commitment changes the terms of the products offered, as well as engagements with individual companies.”
Attorneys General Austin Knudsen of Montana, Jeff Landry of Louisiana, and Sean Reyes of Utah are leading the charge against ESG investing, with 18 other Republicans signing onto the letter. The widespread agreement on the ramifications of ESG standards is a clear indication that South Dakota should stand with other state leaders and push back against ESG investing.
The overtly political mission of ESG investing is empowering financial management firms such as BlackRock, JPMorgan and Goldman Sachs to use their $40 billion in assets to promote the liberal agenda, completely disregarding the best interest of their clients.