Attorneys general from 24 states have sent letters to 25 asset management companies demanding answers about their recent votes on proposals that overly prioritized environmental issues over shareholder concerns.
All of the companies questioned had voted more than 75% in line with environmental proposals from the nonprofit Shareholder Services Organization (ISS), which was highlighted by the environmental group Ceres.
“While asset management support for these shareholder proposals was more than double that of the overall market, overall market support was only 37%, and only 17% of these proposals received majority support,” said the letter, spearheaded by Montana Attorney General Austin Knudsen.
“Given this significant difference, we are concerned that asset managers may not be fulfilling their fiduciary duties by outsourcing voting in this area to ISS or another third party,” the letter said.
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Alabama Attorney General Steve Marshall, another lead signatory, said that as the state's elected official tasked with protecting Alabamians, that role includes protecting consumers.
Marshall said the letter seeks to determine whether these financial institutions have essentially “outsourced due diligence” to non-trust companies whose policies are more aligned with Washington Democrats and the environmental movement than with their own shareholders.
“So to the extent that adverse actions are being taken against consumers, I think it's our duty to take action here,” he said.
The letter aims to get answers to pressing questions, the most important of which is: [these votes] “In the economic interest of shareholders in my state,” Marshall said.
“And are you trying to maximize financial gain or are you trying to advance a political agenda?”
“One of them is consistent with fiduciary duty. The other is not.”
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ESG investing has become the new buzzword with influence from Wall Street to Washington, where the Senate voted to repeal rules proposed by the Biden administration that would have set ESG standards for retirement funds. (AP Photo/Mary Altafur, File)
Fox News Digital reached out to several of the companies that were listed as having the most support for pro-environmental sentiment in the letter, but received few responses.
A representative for Legal & General Investment Management, which voted nearly 95% in favor of the proposal recommended by ISS, declined to comment when contacted by reporters.
A person who answered the phone at Wilmington Trust's public relations office declined to comment, then said the letter was “fairly broad” before hanging up. The Delaware-based company recorded an 88% vote in favor of the green recommendation.
Allianz Global Investors, which posted a 93% decline, did not respond to requests for comment, as did UBS Capital Management.
Maryland-based ProFund Advisors/ProShares promised to comment 93 percent of the time, according to the letter, but did not respond beyond that.
The letter goes on to outline several specific proposals of concern, including: [greenhouse gas] “This will be a target for traditional energy producers and closely related companies, effectively restricting the sale of their products.”
The other 10 proposals called for “restrictions.” [corporate] Some countries are guaranteeing “freedom of speech” in line with the Paris Agreement, while others are setting a deadline for achieving net-zero emissions by 2050.
Asked about his main concerns, Marshall said he wondered how many of the founding members of organisations these companies might look to for guidance were ESG advocates or members of the Net Zero Alliance.
Environmental, Social and Governance (ESG) is an abbreviation for investment principles that prioritize environmental issues, social issues and corporate governance.
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Caribou-Targhee National Forest, near the Idaho-Wyoming border. (Jordan Early/Fox News Digital)
“[Those] “They have an absolute objective, and it has nothing to do with financial return to investors,” he said.
“The question for these asset managers is, have they investigated their conflicts of interest and has that influenced these voting recommendations?”
“Frankly, as an attorney, you care about conflicts. But what's more important to the residents of our state is whether those conflicts are not only working against their economic interests, but potentially working against the economic interests of the state of Alabama as a whole.”
Virginia Attorney General Jason Miyares, another state prosecutor who signed the letter, said the companies have a fiduciary duty to be “good stewards” to investors.
“A healthy economy must take precedence over social trends,” Miyares said, adding that shareholder funds “should not be pocketed by those driven by irresponsible social and political agendas.”
