News/Commentary

‘Stay in your lane!’ 21 states threaten nation’s largest financial institutions with legal action over woke policies

March 31, 2023 | | Print Article

Nearly two-dozen states joined forces on Thursday to push back against the pursuit of environmental and social agendas by financial institutions and asset managers.

A letter was sent on Thursday to 53 of the largest financial institutions in the nation from 21 state attorneys general, warning them that those who put woke agenda above the best interests of their clients will face legal action.

Financial behemoths such as BlackRock, Franklin Templeton, Goldman Sachs, HSBC, JP Morgan, State Street, and dozens more — institutions that are collectively responsible for trillions of dollars worth of assets — were told to “do what you’re supposed to do” and abandon their Environmental, Social, and Governance (ESG) requirements.

“The effort, led by Montana, Utah and Louisiana, comes ahead of proxy season during which most companies hold annual shareholder meetings where they vote on key policy initiatives,” reports Fox News Digital (FND).

In an interview with FND, Montana A.G. Austin Knudsen called the ESG push “nonsense.”

“This ESG nonsense is filtering into a lot of our states and the way they’re doing it is really, really concerning and probably flagrantly illegal,” Austin said. “Pushing it through these asset managers and through these proxy votes is extremely concerning.”

“The message is: ‘Stay in your lane and do what you’re supposed to do. You have a fiduciary obligation under our various states laws to maximize investment. That’s your job. That’s what you’re supposed to be doing. We’re aware of state law and if it needs be, we will defend our state pensioners against anything outside that lane,'” he stated.

Asset managers have a legally-mandated fiduciary duty to do the very best they can for their clients, but critics — and there are many, including the energy industry, consumer advocacy groups, and state officials — claim they are acting as “activists” rather than financial advisors.

“You are … not only bound to follow the general laws discussed above but also have extensive responsibilities under both federal and state laws governing securities,” the attorneys general stated in the letter, first obtained by FND. “Broadly, those laws require you to act as a fiduciary, in the best interests of your clients and exercising due care and loyalty.”

“Simply put,” it continued, “you are not the same as political or social activists and you should not be allowing the vast savings entrusted to you to be commandeered by activists to advance non-financial goals.”

Of particular concern are ESG-compliant climate policies that are damaging the fossil fuel industry and driving up consumer energy prices.

“The letter Thursday highlighted that asset managers participate in Climate Action 100+ and have joined the Net Zero Asset Managers Initiative (NZAM),” according to Fox News. “The two associations require members to make certain climate commitments.”

Fox News explains:

For example, the NZAM requires members to “accelerate the transition towards global net zero emissions and for asset managers to play our part to help deliver the goals of the Paris Agreement.” NZAM members also commit to implement “a stewardship and engagement strategy, with a clear escalation and voting policy, that is consistent with [their] ambition for all assets under management to achieve net zero emissions by 2050 or sooner.”

And the Climate Action 100+ initiative seeks commitments from boards and senior management to “reduce greenhouse gas emissions across the value chain” via net zero commitments.

 

“None of this is financially defensible,” the letter reads. “Instead, it is a transparent attempt to push policies through the financial system that cannot be achieved at the ballot box.”

The institutions were also warned against jumping into abortion or race and gender wars.

“More than 20 abortion-related proxy measures have been proposed this year,” Fox News reports, “more than every other year combined, according to the shareholder advocacy group As You Sow.”

 

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