Dive Brief:
- A coalition of 17 Democrat finance officials have sent a letter to executives at BlackRock and 17 other firms, pushing the institutions to reaffirm their commitment to managing long-term risks like climate change, according to a Thursday press release from Maryland Comptroller Brooke Lierman’s office.
- The coalition is also looking for financial institutions to meet directly with its members — which include state comptrollers, treasurers and other finance officers — as well as expand proxy voting opportunities and develop tools for enhanced capital oversight, the release said.
- The Aug. 15 letter was designed to counter one sent last month by 26 Republican state finance officials, organized as the State Financial Officers Foundation, that pressured BlackRock CEO Larry Fink and executives at 24 other U.S. financial institutions to eschew framing climate change as a risk and stop incorporating net-zero commitments.
Dive Insight:
The Democratic finance officials behind the Aug. 15 letter represent more than $3 trillion in pension fund assets, according to Lierman’s release and are organized under the group Americans for Responsible Growth. The coalition of blue state finance officials said in the letter that they believe the Republican officials’ letter “misrepresent the true meaning of fiduciary duty.”
In addition to Maryland’s Lierman, the finance officials also represent 16 other states including California, Colorado and Illinois, with New York City Comptroller Brad Lander serving as the only city finance official signed on. Coalition members said they believe fiduciary duty requires “active oversight, responsible governance, and the full exercise of ownership rights” for their pensioners.
“Fiduciary duty, as properly understood, requires — not prohibits — investor consideration of material risks and long-horizon opportunities. Institutional investors, including public pension funds, are long-term owners,” the officials wrote. “They bear the consequences of unmanaged risks —whether climate-related, governance-related, or supply chain-related — and must ensure that corporations and their boards address such risks with transparency and accountability.”
Executives at Vanguard, State Street and JPMorgan Chase also received the Americans for Responsible Growth letter, the group told ESG Dive Friday. The full list of recipients include Amundi, BNY Mellon, Capital Group, Fidelity Investments, Franklin Templeton, Geode Capital Management, Goldman Sachs, Invesco, Legal & General, Morgan Stanley, Northern Trust, Nuveen, T. Rowe Price and Wellington Management.
While there is a lot of overlap between the lists of recipients of the Republican and Democrat officials’ letters, Amundi and Legal & General were not reported as recipients of the July letter. Additionally, the SFOF letter went to a larger number of institutions.
In addition to no longer framing climate change as a long-term risk, the Republican-led letter urged firms to abstain from incorporating net-zero commitments, natural capital frameworks and the European Union’s Corporate Sustainability Reporting Directive into their investment strategies.
“Asset managers must choose whether they will stand with working families and retirees who need long-term value creation, or whether they will cave to political pressure and abandon their most basic responsibilities,” Lierman said in the release.
The Democrat finance officials also represent Connecticut, Delaware, Maine, Massachusetts, Minnesota, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington. They are looking for firms to reach out to meet with their offices and reaffirm their “current commitment to responsible stewardship” by Sept. 1, according to the letter.
