March 31, 2023
Today, Utah Attorney General Sean D. Reyes and 20 other state attorneys general warned more than 50 of the nation’s largest asset managers about Environmental, Social, and Governance (ESG) investments being made with Americans’ hard-earned money as annual shareholders’ meetings begin for many public companies.
In an open letter sent Thursday to 53 asset managers with $40 billion or more in assets, the attorneys general cite concerns that asset managers may be pushing the political goals of Climate Action 100+ and the Net Zero Asset Managers Initiative rather than acting in the best fiduciary interests of their clients, which is their legal obligation.
“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 attorneys general wrote. “As explained further below, 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 by 2050. This specific, political commitment changes the terms of the products offered, as well as engagements with individual companies.”
The coalition reminds asset managers in the letter that they have extensive legal duties to their clients under federal and state law to act as fiduciaries to their clients, which many appear to be disregarding in favor of their commitments to the Net Zero Managers Alliance and Climate action 100+, which push ESG initiatives.
In addition, the coalition note that during the 2023 proxy season asset managers will need “to choose between their legal duties to focus on financial return, and the policy goals of ESG activists” as banks, insurers, and utility and energy companies are all facing proposals from climate activists affiliated with organizations asset managers may have joined. Additionally, abortion and political spending and race and gender quotas may also be included in numerous proposals this year but are not financially justified – and ESG aims themselves are not valid defenses.
“We will continue to evaluate activity in this area in line with our ongoing investigations into potential unlawful coordination and other violations that may stem from the commitments you and others have made as part of Climate Action 100+, Net Zero Asset Managers Initiative, or the like,” the attorneys general warned.
Attorneys general from Alabama, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, New Hampshire, Ohio, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wyoming signed onto the letter led by Montana Attorney General Austin Knudsen, Louisiana Attorney General Jeff Landry, and Utah Attorney General Sean Reyes.
Click here to read the letter.