House Judiciary Chairman Jim Jordan (R-OH) announced he is subpoenaing BlackRock and State Street over potential antitrust law violations and concerns of Environmental, Social, and Governance (ESG) advancing progressive policy aims. 

One of the subpoenas reads, “Corporations are collectively adopting and imposing progressive environmental, social, and governance (ESG)-related goals, and BlackRock, Inc. (BlackRock) appears to have entered into collusive agreements to ‘decarbonize’ its assets under management and reduce emissions to net zero in ways that may violate U.S. antitrust law.”

This subpoena comes after a July 2023 Congressional inquiry into how these companies undermine their fiduciary responsibility to clients by advancing ESG policies. Judiciary Republicans claim both financial asset managers failed to turn over sufficient paperwork and documents.  

BlackRock and Street Street make up the “Big Three” financial asset managers, including Vanguard, and all three cumulatively manage over $20 trillion in assets under management (AUM). 

The world’s largest financial asset manager, including its CEO Larry Fink, has long prioritized investing strategies that stray away from maximizing profits. But growing opposition to woke investing is forcing them to sing a different tune of late.

Over the summer, Mr. Fink said the ESG term is “too weaponized.” This comes after the company lost $4 billion in cash inflows from ESG funds in 2022. Two poor-performing ESG-linked mutual funds were canned earlier this fall. 

ESG is losing its luster all around. As I recently noted here at IWF:

ESG funds are closing at alarming rates. Morningstar reports in Q3 of 2023 that investors withdrew more than $2.7 billion from sustainable funds—following four straight quarters of net withdrawals for ESG funds. In 2023 alone, investors have reportedly pulled $14.2 billion from ESG funds thus far citing factors like “rising energy prices, high interest rates, concerns about greenwashing, and political backlash.” And the Securities and Exchange Commission, an agency eager to force ESG by regulatory fiat, announced it is dropping it from its list of 2024 compliance priorities.

Even the Big Three of ESG investing—BlackRock, State Street, and Vanguard—turned against shareholder proposals that prioritize non-financial goals over conventional investment strategies this year.

More trouble lies ahead for the “Big Three”—especially BlackRock. This week, Tennessee filed the first-ever lawsuit against BlackRock alleging it violated consumer protection laws. 

“We allege that BlackRock’s inconsistent statements about its investment strategies deprived consumers of the ability to make an informed choice,” Tennessee Attorney General Jonathan Skrmetti said in a press release. “Some public statements show a company that focuses exclusively on return on investment, others show a company that gives special consideration to environmental factors. Ultimately, I want to make certain that corporations, no matter their size, treat Tennessee consumers fairly and honestly.”

ESG backers aren’t dismissing anti-ESG efforts anymore and, instead, are urging supporters to befriend Republicans. It’s not just elected Republicans opposing ESG. 20% of investors own ESG funds as this type of investing faces more unpopularity on Wall Street. 

To learn more about ESG, go HERE.