Dark Money Group Attacks Climate Investors

January 31, 2023

While Republicans wrestle with how to polish their public face on climate change, their operatives continue to sharpen attacks on anything that would mitigate fossil fuel power or dominance in the economy.

I’ve looked at the shift that big investment groups are making towards clean energy and climate-aware investing – and there is room to criticize the speed and scale of some of those actions, but for the fossil fuel interests, any deviation from total obeisance is intolerable, and must be punished. Now with congressional power, Big Oil will bring their dark money leg breakers to bear on those they consider disloyal.

Washington Post:

Bankrolled by mysterious donors, a little-known group named Consumers’ Research has emerged as a key player in the conservative crusade to prevent Wall Street from factoring climate change into its investment decisions.

On Dec. 1, the group joined 13 state attorneys general in calling for a federal regulatory agency to investigate Vanguard, one of the world’s three biggest financial asset managers. Consumers’ Research accused Vanguard of “meddling with [the] energy industry to achieve progressive political goals at the expense of market efficiency.”

Within days, Vanguard announced it was quitting a coalition called the Net Zero Asset Managers Alliance and shelved its own modest pledges to cut the amount of greenhouse gas emissions linked to companies in which it invests. Leaders of Consumers’ Research were surprised — and elated.

“I knew we had found something important,” said Will Hild, who became executive director of the organization in March 2020, just as the pandemic hit. “But I didn’t know Vanguard would just capitulate.”

Vanguard didn’t put it that way. In a statement, it affirmed its commitment to “helping our investors navigate the risks that climate change can pose to their long-term returns,” despite leaving the business coalition.

Even so, Hild’s group and other opponents of “woke capitalism” are feeling emboldened now that Republicans control the House of Representatives. They see themselves as part of a political alliance that can scrutinize and possibly derail the environmental, social and governance — or ESG — goals of corporations and the Biden administration.

Some big Wall Street firms — most notably BlackRock, State Street, Vanguard and Fidelity Investments — have publicly embraced sustainable investing, partly because of investor demands and pressure on businesses to speed up climate measures.

But Republicans have promised to reverse what Rep. Garland “Andy” Barr (R) called a “cancer on our capital markets.” In mid-December, Barr and Sen. Mike Braun (R-Ind.) introduced legislation to nullify a Labor Department regulation that allows ESG strategies to be used in retirement plans. In addition, Barr and Rep. Bill Huizenga, (R-Mich.) hope to revive legislation they introduced in December that would block the Securities and Exchange Commission from requiring publicly traded companies to disclose their climate risk.

These activists hope that House leaders will haul corporate executives before Congress to defend their ESG practices. The hearings will examine how many financial asset managers have used their large shareholdings to pressure other companies to curtail greenhouse gas emissions, improve sustainability or bolster corporate governance.

Over the past three years, Consumers’ Research has morphed into a self-styled watchdog of liberal causes. It has singled out ESG, which it argues harms consumers, reduces investment returns and contributes to inflation. In 2021, its budget grew tenfold to more than $8 million, according to its 990 tax form. Nearly $6 million came from DonorsTrust, a conservative billion-dollar charity, according to its 990 tax document, though Hild declined to provide details. He said the largest single donation was in “the low seven figures” and the 2022 budget would end up closer to $10 million.

While Hild depicts his group as a consumer watchdog, others see it as a right-wing front group with anonymous donors seeking to stall action on climate change.

Erich Pica, president of Friends of the Earth, said in an email that “there is a deep irony with Republicans opposing ESG while pushing companies to have unfettered free-speech” thanks to Supreme Court cases allowing unlimited campaign spending by corporations and outside groups.

Hild, however, says Consumers’ Research is all about focusing on corporations, but with a different agenda than those of liberal groups. “We want to educate consumers about the issues important to their interests,” he said.

In 2021, the group paid $1.6 million to the law firm Jones Day to file suit against the Consumer Products Safety Commission, arguing that its members should not be shielded from being fired by Congress or the president. The case is on appeal.

That same year, Consumers’ Research took aim at the Federal Communications Commission, arguing that the FCC’s Universal Service Fund — which takes money from one area of the country and provides it to underserved areas — is “an unconstitutional tax raised and spent by an unaccountable federal agency.” It paid $400,000 to the law firm of GOP veteran Boyden Gray to handle the case.

In what could be seen as a dress rehearsal for congressional hearings, a Texas state Senate committee quizzed senior executives of BlackRock, State Street and ISS for more than six hours in mid-December.

Senators pressed Dalia Blass, BlackRock’s head of external affairs, about whether the firm’s membership in Climate Action 100 had created a “bias” against investing in a Permian Basin oil project vs. a solar project.

“We do not use ESG scoring for our investments,” she said, adding that its one bias was “to get the best risk-adjusted returns for our clients.”

Many financial analysts say eliminating analysis of climate risks would be shortsighted for elected officials and for corporations. Such restrictions would “oversimplify the issue,” said Susan H. Mac Cormac, a partner and ESG expert at the law firm Morrison Foerster. She said many Wall Street strategies “are fundamentally part of risk assessment and are specifically tied to improving returns.”

But Hild said his group will continue to focus on BlackRock and other companies, with an overall aim “to end the scam on consumers that is ESG.”

Like BlackRock and Vanguard, “any companies engaging in the same sorts of behavior are on notice they could be our next targets,” he said.


One Response to “Dark Money Group Attacks Climate Investors”

  1. At three minutes in, Catherine Wood, CEO Ark Invest, says that in 18 months EVs will cost less than comparable ICE cars. I note that when I watch the video on YouTube, it’s from two years ago!

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