In its 2023 end-of-year filing with the U.S. Securities and Exchange Commission (“SEC”), BlackRock pointed out that its ESG investment strategy was a risk for the company, partly because of the growing political scrutiny surrounding environmental, social and governance practices. BlackRock is a multinational investment company as well as the biggest asset manager globally with $10 trillion in assets.
The company explained in its 10-K form that if it wasn’t able to successfully manage expectations related to these practices across varied shareholder interests, it’s reputation would be negatively affected, as would its ability to retain and attract employees, clients, business partners and stakeholders. The 10-K form is a report detailing a company’s financial performance over the previous fiscal year; the form is submitted to the SEC annually.
In its statement, the company noted that failure to manage these expectations could also result in governmental or legal action, and even litigation, which would cause a drop in its earnings, revenues and assets under management.
When questioned about the 10-K, BlackRock stated that it had consistently labelled ESG as one of many risk factors for its business. The company explained that in the last five years, clients had entrusted it to manage almost $1.9 trillion in net new business, noting that it did so because the organization serves clients with a range of investment demands and objectives. The company further noted that as a fiduciary, it provided choices to help clients achieve their goals.
In recent years, GOP members in red states and Congress has conducted investigations into the company’s ESG activity and membership in coalitions on environmental investment. Last year, House representative Jim Jordan, the incoming chair of the House Judiciary Committee, subpoenaed the firm for records on its ESG policies for his inquiry into the possibility of antitrust violations on Climate Action 100+. The probe focused on whether major climate groups at the forefront of the ESG movement were in violation of antitrust laws.
Austin Knudsen, Montana’s attorney general, is also leading a group of Republican attorneys general looking into the company’s ESG investments and whether those investments violate its fiduciary duty. Last month, those attorneys general penned a letter to the investment company, raising concerns about its public statements on ESG and possible conflicts of interest with directors of mutual funds. In a statement, Knudsen noted that the company’s investors deserved answers about its ESG investments and possible conflicts of interest.
That same month, BlackRock withdrew from Climate Action 100+ in a bid to distance itself from ESG.
Despite the growing controversy around ESG principles, a number of companies such as First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) have adopted these practices. This is because implementing ESG appears to bring a number of benefits, including bottom-line benefits to companies.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
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