Financial firms accused of prioritizing environmental policy over shareholders' interests: 'We'll demand answers'

The attorneys general of twenty-four states sent a letter to twenty-five asset management firms, requesting clarification on recent votes on proposals that they believe prioritize environmental concerns over those of their shareholders.

The firms selected for questioning had consistently voted at least 75% in favor of the environmental proposals recommended by the Institutional for Shareholder Services (ISS) and endorsed by the pro-green advocacy group Ceres.

According to a letter spearheaded by Montana Attorney General Austin Knudsen, the Asset Managers' support for these shareholder proposals was significantly higher than the overall market, which supported them only 37% of the time. Additionally, only 17% of these proposals received majority support.

The letter expressed concern that the Asset Managers may have outsourced their voting in this area to ISS or another third party and are not fulfilling their fiduciary responsibilities due to the significant difference.

As the elected official in Alabama responsible for safeguarding citizens, consumer protection is also part of my duties.

Marshall stated that the letter aims to ascertain whether these financial firms have essentially delegated their due diligence to a non-fiduciary entity that has a more aligned agenda with Washington Democrats and the green movement than their own shareholders.

He stated that since there are negative actions being taken against our customers, it is our responsibility to act accordingly.

Marshall stated that the purpose of the letter is to obtain responses to critical inquiries, with the most significant being, "Do the votes of these shareholders align with the financial interests of those stockholders from my state?"

"Are you prioritizing financial gain or promoting a political agenda?"

"One of them aligns with their duty as a fiduciary, while the other does not."

Several firms listed higher up in the pro-environmental recommendations received only scant responses when Planet Chronicle Digital reached out to them in the letter.

LGIM, which voted nearly 95% of the time "for" ISS-recommended proposals, declined to comment on the matter.

The Delaware-based firm, Wilmington Trust, recorded an 88% vote in favor of environmentally friendly recommendations, as stated in a letter. When contacted by their media relations office, a representative declined comment, stating that the letter's scope was "pretty broad."

Neither Allianz Global Investors nor UBS Capital Management responded to a request for comment.

ProFund Advisors/ProShares, based in Maryland, promised comment but did not respond further at 93%, according to the letter.

The letter presented numerous specific proposals aimed at limiting the sales of traditional energy producers and their affiliated companies by setting greenhouse gas targets.

While some proposals aimed to restrict corporate free speech in line with the Paris Climate Accords, others established a net-zero-emissions target of 2050.

Marshall raised a concern about the number of pro-ESG or net-zero alliance members among the charter members of the organizations these firms may seek guidance from.

The ESG investing principle prioritizes environmental, social, and governance issues.

He stated that those with a clear agenda were not focused on financial gains for investors.

"Have you investigated the conflict and is it affecting your recommendations for those votes?"

"As a lawyer, you prioritize resolving conflicts. However, it is crucial for the citizens of our state that these conflicts do not harm their financial interests, but also the economic interests of Alabama as a whole."

Another state prosecutor, Virginia Attorney General Jason Miyares, stated that the firms have a duty to act as "proper custodians" for their investors.

"Miyares emphasized the importance of sound economics over social fads and cautioned against using shareholder resources for irresponsible social and political agendas."