During the last election cycle, Senate Majority Leader Charles Schumer (D-NY) got more money from BlackRock and its employees than any other member of Congress.
The American Accountability Foundation, a non-profit organization that conducts research and oversight of the government, made note of Schumer’s relationship with the asset management firm after he voted against repealing a Labor Department rule that would have allowed retirement fiduciaries to allocate funds following the environmental, social, and corporate governance (ESG) movement. The House and the Senate have passed a rule-changing resolution, but President Joseph Biden has promised to veto the measure.
Some people believe that the ESG movement, of which BlackRock is a leading proponent, dilutes or diverts attention and resources from financial success since it combines political and social issues like lowering carbon emissions and enhancing ethnic diversity. Even still, according to OpenSecrets, Schumer accepted $103,950 from BlackRock employees and their families, as well as $10,000 from a BlackRock-backed PAC.
Last week, Schumer made the assertion on social media that resolution opponents were seeking to turn ESG into a “filthy acronym” by employing the same attacks they had previously used against “woke agenda” elements. “Wokeness” is a term coined by the ESG crowd. The term “cult” is frequently used to describe its adherents. Many are saying this is a threat to unrestricted markets. What I term “ESG” is “common sense,”
BlackRock donates to politicians of both parties, giving $639,000 to Republican candidates and $453,000 to Democratic candidates in the most recent midterm election cycle. Senators Lisa Murkowski (R-AK) and Raphael Warnock (D-GA) were the second and third greatest recipients of funds from BlackRock and people affiliated with BlackRock, respectively.
The Labor Department under the Trump administration removed a requirement that retirement fund managers “select assets based on non-pecuniary concerns,” meaning that they must now “base investment decisions on financial issues” solely. A new regulation from the Biden administration lifts the restriction on ESG investments for retirement fiduciaries, allowing investment managers to take into account “the economic consequences of climate change and other ESG concerns” where applicable to a risk-and-return analysis.
The House passed a motion to do away with the rule by a count of 216 to 204, and the Senate followed suit by a count of 50 to 46. Republican Senator Mike Brain of Indiana and House Andy Biggs of Alabama introduced the legislation, which was supported by Democratic Senator Jon Tester of Montana, Senator Joe Manchin of West Virginia, and Democratic Representative Jared Golden of Maine (R-AZ).
Yet in a Wall Street Journal editorial, Schumer called Republican resistance to the new law disingenuous. “Republicans preach about their support for the free market, little government, and letting the private sector do its business,” he said. Their obsession with eliminating ESG, however, would have the opposite effect, forcing their views on every company and investor. Republicans would prevent market changes that would be beneficial to investors and the economy if they could.
And since they “minimize risk and increase their customers’ returns,” Schumer added, “America’s most successful asset managers and financial institutions” favor ESG investing. ESG funds had a bad year in 2018 because the technology sector, which ESG managers tend to favor because of their emphasis on corporate social responsibility, underperformed while the energy sector, which ESG managers tend to shun because they avoid industries with heavy carbon emissions, outperformed.
BlackRock’s assets under management decreased from $10 trillion in the fourth quarter of 2021 to $8.6 trillion in the fourth quarter of 2022, as reported in the company’s most recent earnings report. A new wave of layoffs was initiated by BlackRock management.