Blackrock Inc. has been one of the most vocal champions of the environment, social and governance (ESG) movement, also known as “woke capitalism.”
Yet, during the 2023 proxy year, the company voted against 93% of shareholder proposals focused on ESG issues.
For Wyoming Secretary of State Chuck Gray, it signals that efforts against ESG are finding success.
“Our pushback against ESG is gaining ground. American have simply had enough,” Gray told Cowboy State Daily.
Shareholder Proposals
ESG measures rate funds on various markers of progressive-friendly policies related to protecting the environment, diversity in the workplace and community relations. Even though fossil fuels supply 82% of the world’s energy — a figure that’s barely budged in decades — and the industry provides solid returns, any association with oil, gas or coal quickly gets a company rated down.
With Wyoming’s economy powered by fossil fuel industries, the ESG movement has been targeted since Gov. Mark Gordon was state treasurer.
If a shareholder owns as little as $2,000 worth of stock for three years, U.S. security laws allow that shareholder to submit a proposal for the company’s shareholders to vote on.
By Any Other Name
Blackrock supported 9% of ESG proposals this year, which was down from the 24% it supported in 2022. In 2021, the company voted for 43% of these kinds of proposals.
Gray said that people are moving their money out of firms like Blackrock over concerns that its investment decisions are being guided by progressive values rather than financial ones. Blackrock is responding to that, Gray said, but he cautioned against the idea this means Blackrock or other firms that championed ESG have given up on it.
“It does appear that these entities are still attempting to advance woke, ESG-like policies, but with different labeling,” Gray said.
In June, Blackrock CEO Larry Fink said at a speaking engagement at an educational seminar in Aspen, Colorado, that he no longer used the term “ESG” because of the backlash it has received.
Pensions & Investments reported that Fink said that there’s nothing to be ashamed about ESG. It’s just not a word he uses anymore.
Disclosure Rule
Because firms like Blackrock are retreating from ESG and not denouncing its aims, Gray said transparency is needed.
This is why he requested an administrative rule that, if approved by Gov. Mark Gordon, will require investment brokers, broker dealers and securities agents doing business in Wyoming to disclose to their clients if they are using environmental, social and governance principles in the course of their business.
If the rule passes, Gray said the disclosure would reveal ESG policies disguised under different names.
“These clown-show strategies do not have a profit maximizing goal, which causes them to violate the basics of what a fiduciary should be doing,” Gray said.
The governor granted permission for the administrative rulemaking process to proceed for Gray’s disclosure rule. The rule is now out for public comment.
After the comment period, the Secretary of State’s office may modify or withdraw the rule based on public comments before the agency adopts the rule. The adopted rule then goes to the governor for a final process in which the attorney general and Wyoming Legislature provide feedback. After a 75-day period, the governor can approve or veto the rule.
The total process can take four months.
Band Together
Earlier this month, the State Loan and Investment Board also voted to add an ESG rule in its official Investment Policy Statement.
In the last legislative session, Sen. Bo Biteman, R-Ranchester, sponsored a couple of bills to push back against ESG. Both bills passed the Senate, and then the House Appropriations Committee substituted the bills without notifying Biteman.
The Wyoming Freedom Caucus condemned the actions.
Biteman told Cowboy State Daily that Blackrock and other pro-ESG firms are just rebranding their stakeholder capitalism, as they sometimes call it.
“They're all-in on the stakeholder capitalism train,” he said. “And that's not going to change until states like Wyoming and other states band together and put a stop to it, and put our money where our mouth is.”
Protecting Wyoming Industry
Biteman said Wyoming still needs legislation to address the issue, but after what happened in the last session, he’s not sure it’s worth his time and energy to pursue it in the 2024 session, when any bills will face the same committee, same committee chairman and same House speaker. So, it might have to wait until 2025.
“We might have to wait on the election cycle to flush out some of these people and come back with a new Legislature,” he said.
Sen. Cheri Steinmetz, R-Lingle, who co-sponsored one of Biteman’s ESG bills, told Cowboy State Daily that a change in policies at these pro-ESG firms, sincere or not, doesn’t change Wyoming’s position on the issue, which is that the oil, gas and coal industries need to be protected.
“The Legislature must continue to be vigilant against this, and we will continue to do our part to protect our legacy industries and oversee the investments made on behalf of the citizens of Wyoming,” Steinmetz said.
Strive Asset Management
Among the concerns of critics of Biteman’s bills was that refusing to do business with these firms would ultimately hurt Wyoming financially.
Biteman said the Kansas Legislature successfully passed ESG legislation. The law withdraws Kansas investments in the big three ESG funds — Blackrock, Vanguard and State Street — and invests these public funds in Strive Asset Management.
The founders of Strive had a vision of doing business without considering social agendas or based on leaning one political direction or another.
“We believe that makes us a better fiduciary for the vast majority of Americans that do not want to see corporations getting involved in politics,” Strive co-founder and COO Anson Frericks told Cowboy State Daily last year.
Biteman said that Wyoming should do the same thing, even though it is difficult to cut ties with these major firms. He said, considering firms like Blackrock don’t have Wyoming’s best interests at heart, it’s worth the effort.
“We got to do what’s best for the people of Wyoming,” Biteman said.
