Watch Dog Group Uncovers ESG Misuse of State Pension Funds

In business settings, liberals assume that companies don't really care about the environment. They also assume that their hiring practices aren't diverse enough and that the company's stance on social issues such as LGBTQ rights, CRT, and abortion may not meet their standards.

The left wants your company's primary agenda to align with their own. They want you to disregard the economic metrics on which your company was built, as only conservatives and rational people believe in those. Your company will now be expected to champion social justice causes and to ensure compliance; it may very well receive an ESG rating, essentially a report card.

According to the annual financial report, as of June 2023, the Oklahoma Public Employees Retirement System (OPERS) has enlisted the services of BlackRock to manage around $4.4 billion of the system’s investments. Documents obtained through a public records request show that BlackRock voted 54 times to support shareholder proposals, including policies such as racial equity audits, gender pay gap reports, efforts to defund conservative candidates and pro-business trade associations, and radical climate policy, as reported by AAF.

In an interview with the Daily Caller News Foundation, AAF President Thomas Jones said:

“Oklahomans deserve so much better than to have their retirement savings used as leverage for woke corporate activism. This inappropriate use of public funds jeopardizes the financial security of hardworking Oklahomans who depend on their pensions and endangers the livelihoods of every energy worker in America. These woke bankers and Wall Street elites are using taxpayer dollars to impose a leftist agenda on America while making a hefty profit for themselves. This information proves once again why BlackRock must be avoided.”

Firms like BlackRock are used to enhance pension funds. They are trusted to invest in companies that will offer the greatest return. However, in some cases, BlackRock and other firms sacrifice the best investment opportunities and instead use the money to invest in companies that advance racial diversity or the ill-advised green agenda.

Pension, charity, and personal trust trustees invest trillions of dollars on behalf of others under a sacred trust known as fiduciary duty. Fiduciaries are obligated to manage plans in the best interest of participants and beneficiaries solely to provide benefits and pay plan expenses. They must act prudently, diversify investments, and minimize the risk of large losses. There's a growing pressure on trustees to consider ESG (Environmental, Social, and Governance) factors in investment decisions. While ESG investing is gaining popularity, some trustees have resisted, citing potential violations of fiduciary duty. They argue that considering ESG factors might conflict with the duty of loyalty, as trustees should only consider the interests of the beneficiaries.

The question is: Are investments being made to maximize financial returns or motivated by other interests? In August 2022, nineteen state attorneys general wrote a letter to BlackRock CEO Laurence Fink claiming that the asset manager is using state pension fund assets in environmental, social, and governance investments that:

“Force the phase-out of fossil fuels, increase energy prices, drive inflation, and weaken the national security of the United States.”

The letter went on to say:

“Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda. The time has come for BlackRock to come clean on whether it actually values our states’ most valuable stakeholders, our current and future retirees, or risk losses even more significant than those caused by BlackRock’s quixotic climate agenda.”

In 2023, the state of Oklahoma blacklisted 13 financial firms as they were found to be boycotting energy companies, which is prohibited according to the Oklahoma Energy Discrimination Act of 2022. BlackRock is one of the firms on the Restricted Financial Company List. However, BlackRock was exempted from the ban by OPERS for fiduciary reasons, as reported by Pensions & Investments.

In March of last year, Governors from nineteen states sent a letter to the White House stating their objections in this way:

To protect individuals from the ESG movement that threatens the vitality of the American economy and Americans’ economic freedom, we agree to lead state-level efforts, including:

I. Protecting taxpayers from ESG influences across state systems: Among other actions, this may include blocking the use of ESG in all investment decisions at the state and local level, ensuring that only financial factors are considered to maximize the return on investment, protecting retirees and taxpayers alike. This may also include eliminating consideration of ESG factors by state and local governments when issuing bonds or prohibiting state fund managers from considering ESG factors when investing taxpayer money.

II. Protecting citizens from ESG influences in the financial sector: Among other actions, this may include banning the financial sector from considering so-called “Social Credit Scores” in banking and lending practices aimed to prevent citizens from obtaining financial services like loans, lines of credit, and bank accounts. This may also include stopping financial institutions from discriminating against customers for their religious, political, or social beliefs, such as owning a firearm, securing the border, or increasing our energy independence. As Governors, we are committed to protecting the interests of our constituents and will keep fighting the Administration’s decision to jeopardize retirement savings for millions of Americans to promote far-left priorities.

Is ESG affecting 401K and pension funds? The answer is yes. Although, to what extent is well disguised. A trustee/fiduciary is adept at justifying their actions, so an increase in due diligence will definitely be required on an individual basis to discover the scope of ESG priorities being initiated.

The left’s agenda is a virus, and they will stop at nothing to pursue and justify it. Firms like BlackRock must be scrutinized and penalized when found to violate their fiduciary duty. They are playing with pension funds earned over lifetimes of hard work, and nothing justifies endangering that.