Violation of First Amendment by those state govts. But it also means those states are possibly choosing to NOT invest retirement funds to earn the maximum return. THAT would be a breach of fiduciary responsibility by the state govt(s).
They already are doing precisely that. Lots of public examples. Sppankee and Santos are just two of the most recent highly public ones KNOWN.
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Can’t say as I know any ultra-wealthy. But what are you saying here?
DB2
We all have the right to not do business with a company if there is something about that company that we don’t like. The point here is what company behavior the states are objecting to. If the companies used slave labor, and were publicly supportive of the most repressive dictatorships, I would object.
But the states are objecting to the companies offering equal opportunity to employees, regardless of race or gender, and following good corporate governance principles. To me, that seems like objecting that a company does not use slave labor and does not support brutal dictators.
Steve
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I don’t follow the logic here. There are funds that specialize, by industry, company size, geography, and the level of economic development of the home country (e.g., emerging market funds). So why not a fund that specializes in companies with focus on “Sustainable business practices”? As long as the fund manager makes investment decisions based on maximizing returns from within this collection of companies, I don’t see the problem with fiduciary duty.
My problem with ESG investing is that it seems almost impossible to consistently define. It’s like saying we should only hang out with people of good moral character. Good, like beauty, is often in the eye of the beholder.
Consider GMO crops for example. By reducing the need for chemical pesticides, GMOs have probably significantly reduced health risks. Yet many feel the unknowns of GMOs increase heath risks. So are GMO companies ESG or not? (Disclosure, I think GMOs are generally very beneficial and those against it are equivalent to anti-vaxxers).
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Fink said last year he stopped using the term ESG, which encompasses a range of ethically responsible business practices, from curbing carbon emissions to cracking down on discrimination in the workplace, because it has been politically weaponized.
Bob all Fink and the others are getting the states to reopen their business and dropping the term ESG. Dropping a term is like putting up a fig leaf on the topic.
Almost, not quite. The objective of the state retirement funds is highest return with a targeted level of risk. States are blocking investment management by certain businesses (investment fund managers) that might offer higher returns with no additional risk. Which has the potential of ADDING SIGNIFICANT RISK to the state because it can NOT diversify its exposure to risk and thus lessen the potential of loss (or lower returns) for investment funds within the state. Remember Enron? Same problem.
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DB2
Does not change anything.