Indiana, Utah AGs lead multi-state effort to block investment firm reauthorization on voting securities ownership

Rokita, other Republican attorneys general say BlackRock Inc.’s net-zero pledges should make it ineligible to own voting securities in utility companies
May 11, 2023

Indiana Attorney General and free enterprise advocate Todd Rokita is continuing a push to prevent financial institutions from making investment decisions that affect the fossil fuel industry.

Rokita is co-leading a 17-state effort to prevent the Federal Energy Regulatory Commission from reauthorizing BlackRock Inc., one of the world’s largest investment firms, to own more than $10 million in utility company voting securities because the company has pledged to reduce its carbon impact.

This is Rokita’s second such attempt, as the attorney general also joined a similar Republican effort against Vanguard Group, Inc. in 2022.

Rokita said BlackRock’s participation in Climate Action 100+ and the Net Zero Asset Managers Initiative, voluntary and unenforceable initiatives to reduce global greenhouse gas emissions, signal that the company would use the voting power acquired through the purchase of voting securities to steer companies away from fossil fuels.

BlackRock has denied claims it boycotts energy companies or dictates which emission targets or lobbying companies should pursue. The company’s senior managing director and head of external affairs, Dalia Blass, has said its investment decisions that consider climate risk are intended to realize the best long-term financial results for clients.

BlackRock continues to invest in fossil fuels and will most likely continue to do so, with about $109 billion invested in share and holding bonds and the company’s CEO Larry Fink saying the world would need fossil fuels for the next 70 years.

But despite evidence to the contrary, Republicans like Rokita have continued to claim that BlackRock and other major investment firms are involved in fossil fuel “discrimination” and have pursued attempts to persuade the companies to invest in fossil fuels or risk punishment.

“These elitists are trying to impose restrictions on energy companies and utilities that would never win approval at the ballot box,” Rokita said in a press release. “Their schemes could raise utility bills for regular Americans, including elderly Hoosiers on fixed incomes, and they could diminish the value of investment accounts.”

Fossil fuels still make up a vast majority of the energy produced and consumed in the state, but consumers have still experienced price hikes.

Between 2019 and 2022, average monthly residential electric bills for the customers of the state’s largest utilities have risen between 13% and 14%, according to residential electric bill surveys conducted by the Indiana Utility Regulatory Commission.

Electric bills may go up even higher, as the state’s major investor-owned utilities have asked the IURC to approve rate increases to keep up with higher fossil fuel prices.

Indiana lawmakers have passed legislation that is friendly to utilities and the fossil fuel industry that would likely make bills rise even higher. House Enrolled Act 1421 allows electric utilities to charge customers for the construction of new natural gas power plants before they receive a single electron of power from them, and Senate Enrolled Act 9 makes it more difficult for utility companies to retire coal-fired power plants.

Like Rokita, Indiana lawmakers have also expressed concerns that financial institutions are “discriminating” against fossil fuels and other industries Republicans have traditionally given special protections, like gun makers and prison contractors.

The Indiana General Assembly passed House Enrolled Act 1008, which prohibits the Indiana Public Retirement System, which handles pension assets for state employees, from investing in companies that the state treasurer decides have made investments using non-financial factors, like environmental, societal or governance impacts, also known as ESG investing.

“The public interest is served when investment companies build their business models on maximizing financial returns for clients,” Rokita said. “Conversely, the public interest is hijacked when these companies subjugate clients’ financial interests to social and political agendas.”

Besides HEA1008, Indiana lawmakers passed a seemingly contradictory bill, Senate Enrolled Act 268, that directs INPRS to make an ESG-style investment decision by preventing it from investing in companies controlled by the Chinese government whether it makes financial sense or not.

Rokita said BlackRock has claimed to be a “passive” and “non-controlling investor” in FERC filings, but the attorney general disagrees.
“Maybe BlackRock was a passive investor 10 years ago,” the attorneys general state in their motion to intervene, “but today it’s an environmental activist.”

Indiana, Utah AGs lead multi-state effort to block investment firm reauthorization on voting securities ownership