Mississippi slaps BlackRock with cease-and-desist order over ESG

https://www.washingtonexaminer.com/policy/finance-and-
economy/2941273/mississippi-slaps-blackrock-cease-and-desist-order-esg/

BlackRock is facing a legal warning from Mississippi in the form of a 
cease-and-desist order over its ESG policies, the latest salvo from 
Republicans in a multiyear battle with the firm.

The order, issued by Mississippi Secretary of State Michael Watson on 
Wednesday, accused BlackRock of making “fraudulent statements, omissions, 
and other misrepresentations” about its environmental, social, and 
governance strategies. The order comes a week after Texas announced a 
major divestment from the world’s largest money manager.

In the 29-page cease-and-desist letter, Watson said that the 
misinterpretations in question relate to BlackRock “pushing” ESG factors 
on portfolio companies. He argues that many of the money manager’s 
practices “would operate as a fraud or deceit” on investors in 
Mississippi.

“Investment companies will not push their political agenda on 
Mississippians, especially through fraudulent and deceptive means,” Watson 
said in a separate statement announcing the cease and desist. “All 
citizens should have the opportunity to make informed and educated 
decisions when investing their hard-earned money. If not, our office will 
hold these bad actors accountable.”

Republican-led states are years into a war against BlackRock and ESG more 
generally. ESG is a financial concept that centers on compelling social 
change through investment and divestment. It is a corporate model that 
doesn’t solely look at maximizing profit but also incorporates other 
elements into financial decisions — for instance, how an investment might 
affect fossil fuel emissions.

Republican state officials contend that ESG practices run counter to the 
traditional investment model of working to maximize shareholder value. 
They also have argued that firms like BlackRock and some of the big banks 
have worked to use ESG strategies to indirectly “blacklist” fossil fuels, 
firearms, and other disfavored businesses.

BlackRock is pushing back on the Mississippi order, though.

“Many policymakers and government officials have ideas on how we should 
invest our clients’ assets,” the firm said in a statement. “We are always 
bound to invest consistent with our clients’ choices, their best financial 
interests, and applicable law. Our only agenda is maximizing risk-adjusted 
returns for the funds our clients choose to invest in.”

In a phone call, a spokesman for BlackRock told the Washington Examiner 
that several of the contentions laid out in the cease-and-desist order are 
inaccurate. The spokesman emphasized that all the money manager does is 
“in the best financial interest to clients.”

There has been a noticeable shift from BlackRock amid the recent pushback. 
For instance, in 2020, CEO Larry Fink’s much-anticipated annual letter 
focused on climate change, saying the matter was becoming a “defining 
factor” in BlackRock’s assessment of companies.

But in Fink’s latest annual letter released this week, he endorsed “energy 
pragmatism.” He said that strategy entails both investing in clean energy 
technologies to reduce carbon emissions and funding traditional energy 
sources, like fossil fuels, to protect energy security.

Also, in an annual report released last year, it was revealed that the 
money manager supported just 7% of nearly 400 shareholder proposals on 
ESG-related matters. That is a marked shift. BlackRock supported nearly a 
quarter of such proposals in the previous cycle and 47% of environmental 
and social proposals the cycle before that.

GOP states have gone after BlackRock several times in the past. Last week, 
Texas State Board of Education Chairman Aaron Kinsey notified the firm 
that the state was pulling some $8.5 billion in investments from BlackRock 
over its ESG policies.

“BlackRock’s dominant and persistent leadership in the ESG movement 
immeasurably damages our state’s oil and gas economy and the very 
companies that generate revenues for our [Permanent School Fund],” Kinsey 
said. “Texas and the PSF have worked hard to grow this fund to build 
Texas’s schools.”

South Carolina, Utah, Arkansas, Missouri, Louisiana, and other states have 
also divested or announced planned divestments of hundreds of millions of 
dollars from BlackRock and Fink.


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