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FIRST ON FOX - Indiana Attorney General Todd Rokita says Environmental, Social, and Governance (ESG) considerations are "activist-driven agendas," arguing that state law prohibits ESG to influence investments by Indiana government employee pension funds. He says BlackRock, one of the largest investment funds in the world and promotes its "firm-wide commitment to integrate ESG," has potentially "run afoul" of state and federal antitrust laws by using ESG in its investment decisions.
ESG is an ambiguous scoring system that rates corporations based on considerations that have little to do with the bottom line, including companies' environmental, social, and governance policies.
In an August 29 advisory opinion, the Indiana Attorney General argues the Indiana Public Retirement System (INPRS) must invest citizens’ pensions "with care, skill, prudence and diligence." He alleges that because ESG investments are based on political interests rather than financial interests, the INPRS cannot legally base its investments on ESG guidelines.
"These woke Big Businesses are collaborating with their leftist allies to subvert the will of the people, including by investing Hoosiers’ hard-earned money in ways that work against the best interests of Indiana families," Rokita said. "Our advisory opinion makes clear that oftentimes this collusion is not only unconscionable and unethical, but it’s also illegal. And we’re going to hold these firms accountable and give INPRS the tools to do so as well."
A street sign for Wall Street is seen outside the New York Stock Exchange (AP Photo/Mark Lennihan)
In his opinion, Rokita says ESG is "an investment strategy that focuses less on the financial health of a company and more on its social and environmental impacts, as well as how a company governs its own internal affairs regarding issues such as diversity." According to Rokita, environmental goals include eliminating fossil fuels and supporting enforcement of the Paris Accord, social goals include access to abortion, and governance goals include things like "board diversity quotas."
Rokita also says ESGs are imprudent because they "are not reasonably calculated to maximize the risk-adjusted return of trust assets." For example, because of ESG, BlackRock committed to divesting from coal by the middle of 2020, according to Rokita. Around mid-2020, coal was around $50 per ton. Recently, the price of coal has exceeded $400 per ton. "Because of BlackRock’s ESG commitment, the opportunity to profit from this change was likely lost, meaning gains that could have compounded for decades were forgone."
In a May 18 tweet, Elon Musk called ESG a "scam" that has been "weaponized by phony social justice warriors" after the S&P 500 produced its list of companies with the highest ESG performance, with Tesla, despite the electric vehicle maker's mission to "accelerate the world’s transition to sustainable energy," not making the list.
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Todd Rokita (Getty Images)
In an August 4 letter, 19 Republican AGs, including Rokita, sent a letter to BlackRock CEO Laurence Fink saying BlackRock "appears to use the hard-earned money of our states’ citizens to circumvent the best possible return on investment, as well as their vote."
BlackRock could not immediately be reached for comment.
Fox News Business' Lucas Manfredi contributed to this reporting.
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