The founder of a local watchdog has rebutted an international asset manager’s reply to the withdrawal of nearly $800 million by the state of Louisiana from its investment portfolio.
Louisiana’s treasurer John Schroder joins a boycott of BlackRock by Republican-led states that started in July with the state of West Virginia rendering BlackRock ineligible for interstate banking due to its alleged anti-fossil fuel investment strategy, according to media reports.
“This divestment is necessary to protect Louisiana from actions and policies that would actively seek to hamstring our fossil fuel sector. In my opinion, your support of ESG investing is inconsistent with the best economic interests and values of Louisiana,” wrote Schroder in a letter to BlackRock president Larry Fink in announcing his plan to withdraw $794 million.
"I cannot support an institution that would deny our state the benefit of one of its most robust assets.”
In managing some $10 trillion in assets, BlackRock allegedly imposes environmental social, and governance (ESG) guidelines on the boards of directors of its holdings, which include Microsoft, Amazon, Google, and Apple.
BlackRock responded to the pressure by multiple GOP states with a statement online, “BlackRock has recently been accused of 'boycotting' oil and gas companies. We’re setting the record straight about our focus on energy investing, our responsibilities to clients, and how we consider climate risk.”
Louisiana Citizen Advocacy Group rebutted BlackRock’s explanation with the following arguments.
Investments include American energy companies like pipelines and power generation facilities.
That may be true but many landowners and property owners in Louisiana are concerned about imminent domain, according to Attorney Christopher Alexander, founder of the Louisiana Citizen Advocacy Group (LACAG), which tracks state legislation.
“Eminent domain has been a source of great controversy across the country to the extent that private green energy companies or even energy companies can appropriate private property and build pipelines on their property for the purposes of capturing carbon dioxide and burying it in the ground,” Alexander told the Louisiana Record.
Climate change as investment risk is backed by publicly available research, which reflects that even with short-term shocks to the energy sector, including shocks due to the war in Ukraine, the longer-term shift towards a less carbon-intensive economy is likely to continue.
Alexander argues that carbon capture actions, such as windmill turbines, are contingent on their functionality and whether they are a reliable source of energy.
“If they're not a reliable source of energy, then guess what? They're not going to be profitable,” he said. “They're not going to make money and how does that benefit their investors? I don't see how that works.”
BlackRock has invested $170 billion in U.S. public energy companies.
Alexander, however, questions BlackRock’s ESG motives.
“ESG is increasingly embracing a radical, political ideology that goes beyond climate alarmism and there are an increasing number of environmental scientists and engineers who have argued and I think have made some very good points about whether or not there is a significant connection between manmade activity, carbon dioxide emissions, and climate change,” he added. “We don't know for sure but they act as though the science is settled.”