Twenty-four states’ attorneys general fired off a letter to 25 asset management firms, demanding answers for recent votes on proposals they claim disproportionately favor environmental concerns over those of their shareholders.
The firms chosen to be questioned all had voted at least 75% of the time in line with the nonprofit Institutional for Shareholder Services’ (ISS) environmental proposals that had been highlighted by pro-green advocacy group Ceres.
“The Asset Managers’ support for these shareholder proposals was over twice as high as the overall market, which supported them only 37% of the time, and only 17% of these proposals received majority support,” read the letter, spearheaded by Montana Attorney General Austin Knudsen.
“Given this wide disparity, we are concerned that the Asset Managers may have outsourced their voting in this area to ISS or another third party and are failing to carry out their fiduciary duties,” the letter read.
Alabama Attorney General Steve Marshall, another prime signatory, said that as the elected official in his state tasked with protecting Alabamians, that role includes consumer protection as well.
Marshall said the letter seeks to determine whether these financial firms essentially “outsourced their due diligence” to a non-fiduciary entity that has an agenda more aligned with Washington Democrats and the green movement than their own stockholders.
“So, to the extent there is adverse action being taken against our consumers, I think it’s incumbent upon us to act here,” he said.
The letter intends to get answers to pressing questions, the most important of which is, ‘are [these votes] in the financial interests of those stockholders that are shareholders from my state,” Marshall said.
“And, are you maximizing financial return or are you advancing a political agenda?”
“One of those is consistent with their fiduciary responsibility. The other isn’t.”
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ESG investing has become a new buzzword whose influence spans from Wall Street to Washington, with the Senate having voted to kill a rule brought forward by the Biden administration setting ESG standards for retirement funds. (AP Photo/Mary Altaffer, File)
Fox News Digital reached out to several of the firms listed higher up — denoting the most votes in-line with the pro-environmental recommendations — in the letter, and received only scant responses.
When reached, a representative for Legal & General Investment Management (LGIM) — which voted nearly 95% of the time “for” ISS-recommended proposals, declined comment.
A person who picked up the phone at Wilmington Trust’s media relations office declined comment before saying the letter paints a “pretty broad swath” and ending the call. The Delaware-based firm was recorded having voted 88% in line with the environmentally friendly recommendations.
Allianz Global Investors, with 93% recorded, did not respond to a request for comment. Neither did UBS Capital Management.
Maryland-based ProFund Advisors/ProShares — at 93%, according to the letter — promised comment but never responded further.
The letter went on to outline several specific proposals of concern, including 13 that would “set [greenhouse gas] targets for traditional energy producers and closely aligned companies, which would effectively limit sales of their products.”
Ten other proposals sought to “limit [corporate] free speech” in compliance with the Paris Climate Accords, while others set a net-zero-emissions deadline of 2050.
Asked about his main concerns, Marshall said there is a question as to how many charter members of the organizations these firms potentially seek guidance from are members of pro-ESG or net-zero alliances.
Environmental, social and governance (ESG) is shorthand for an investing principle that prioritizes environmental issues, social issues and corporate governance.
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The Caribou-Targhee National Forest near the Idaho-Wyoming border. (Jordan Early/Fox News Digital)
“[Those] have an absolute agenda — which has nothing to do with financial return for investors,” he said.
“The question becomes for these asset managers, have you investigated that conflict and is that impacting the recommendations for those votes?”
“Frankly, as a lawyer, you care about conflicts. But more importantly for the citizens of our state, are those conflicts potentially not only contrary to their financial interests, but also the economic interests of Alabama as a whole?”
Another state prosecutor who signed the letter, Virginia Attorney General Jason Miyares, said the firms have a fiduciary responsibility to be “proper custodians” for their investors.
“Sound economics should take priority over social fads,” Miyares said, adding shareholder resources should not be “pocketed by those driven by irresponsible social and political agendas.”