Treasurer David McRae

“I have grown deeply concerned that the actions of New York investment firms, however, are jeopardizing this system and failing to uphold their fiduciary responsibilities to us,” McRae wrote.

On Monday, Treasurer David McRae issued a letter to the Public Employees’ Retirement System of Mississippi (PERS) Board Members, urging the officers to reject Environmental, Social, and Governance (ESG) policies.

Treasurer McRae said their job is to maximize financial returns for the more than 18,000 members of PERS.

“Each member is relying on the growth and sustainability of this system to support them in their golden years, but I have grown deeply concerned that the actions of New York investment firms are jeopardizing this system and failing to uphold their fiduciary responsibilities to us,” McRae wrote.

In the letter to PERS Board Members, McRae said that over the last few years, ESG investment strategies have lured the attention of Wall Street powerhouses, but not because of ESG funds’ profitability.

“In fact, studies show ESG returns are markedly lower than their conventional counterparts,” McRae said. “Instead, ESG’s sole promise to shareholders is to screen corporate actions as they relate to factors unrelated to financial viability, such as a company’s environmental stewardship, diversity, inclusion, and more.”

The Mississippi Treasurer noted many New York City asset managers have begun to offer ESG options, but BlackRock, Inc., has adopted one of the most aggressive postures, weaponizing their clout and acting as a loyal soldier for the ESG cause rather than those to which they have fiduciary responsibly.

“Specifically, BlackRock has barred hundreds of individuals from joining corporate boards simply because of the candidate’s climate change views, thereby ensuring more and more companies are led by environmental activists instead of business managers,” McRae continued. “And when evaluating the companies themselves, BlackRock explained that climate change is “a defining factor in companies’ long-term prospects.””

McRae outlines several reasons for this action:

  1. ESG standards are being applied subjectively, often according to perceived political ideology rather than hard facts.
  2. ESG policies contribute to inflation and higher costs for working Mississippians.
  3. ESG will do generational harm to Mississippi’s economy and our leading job creators.
  4. ESG scores will create bubbles in favored industries – and bubbles burst.
  5. BlackRock and other ESG investors are knowingly failing to uphold their fiduciary responsibility to PERS members by prioritizing ESG above all else.

BlackRock manages around $10 trillion in assets. Outside of the federal government, almost no one has more financial power. But BlackRock is unelected and not directly accountable to the people of Mississippi.

“We, therefore, must act on behalf of the people, protecting their retirements, their jobs, and their bottom lines,” McRae concluded. “With this in mind, I am today recommending the PERS Board fully divest pension system funds from BlackRock, Inc. Additionally, I urge this Board to formally prohibit the use of any consideration besides financial performance in its investment policy.”