During early August, Arizona Attorney General Mark Brnovich sent a letter to BlackRock CEO Larry Fink, taking him to task on the company’s responsibilities as a fiduciary, especially when it comes to the investment dollars of state pension funds. The letter, which accuses BlackRock of forcing ESG policies on American companies and their employees whose retirement savings are also under their control, was signed by 18 additional state AGs.

The letter questions BlackRock’s duty of loyalty. “Many of our laws state that a fiduciary must discharge their duties solely in the interest of the participants and beneficiaries,” the letter stated. “The stated reasons for your actions around promoting net zero, the Paris Agreement, or taking action on climate change, indicate a rampant violation of this duty, otherwise known as ‘mixed motives.’ Whether mixed motives arise from a desire to save the world or attract investment from European or left-leaning pension funds is ultimately irrelevant to the legal violation. Investors have wide latitude over their own money, but our state pensions must be invested only to earn a financial return.”

The letter states that BlackRock’s public commitments treat the “energy transition” as a fait accompli. “BlackRock’s past failure to predict fossil fuel demand warrants caution regarding its enforcement of net-zero policies on portfolio companies,” the letter said. It reminded Fink that the U.S. has not implemented net-zero mandates, neither have other governments, and that Europe and the U.S. will likely reverse course. Energy security is not aligned with decarbonization and, when the two conflict, energy security wins.

The letter also warns that BlackRock’s coordinated conduct with other fi- nancial institutions to impose net-zero also raises antitrust concerns, saying its actions appear to intentionally restrain and harm the competitiveness of the energy markets. The AGs say that BlackRock’s actions on a variety of governance objectives may violate multiple state laws, and they will not idly stand for pensioners’retirements to be sacrificed for BlackRock’s climate agenda.

BlackRock is one of the world’s leading investment firms and Fink is notorious for his purpose over profits position. Will they take this letter seriously? Do the AG’s have any teeth especially in light of some of the changes that the U.S Securities and Exchange Commission (SEC) is considering? The SEC is considering a rule that would require public companies to speculate in their financial disclosures about the potential impact of future “climate-related events” on their performance and on the performance of their entire value chain. A rule that the agency estimates could nearly triple the cost of being a publicly traded company.

These 19 AGs have gone to a place were few have dared to tread. They are publicly questioning the legitimacy of climate policies and net-zero aspirations, while pointing out that no actual laws regarding these issues have been passed. Net-zero as a goal has already been adopted by some mining companies and suppliers. Like other industries, such as agriculture and manufacturing, many mines simply will not be able to adopt net-zero principles. For them, it would be impractical and likely force the operation to close. These debates are taking place quietly now in boardrooms, especially as inflation erodes profit margins and the ability to support ambitious ESG goals.

Steve Fiscor, Publisher & Editor-in-Chief, E&MJ