While many Republicans are acting performatively outraged over the concept of environmental, social, and governance investing, ESG investing remains popular among many investors — even in red states.
Morningstar recently found that pension plans in states like Texas had an average support rate of 80% for shareholders’ proposals that encourage companies to consider ESG issues as well as their bottom lines. According to the New York Times’ DealBook, just this year, Texas’ Employees Retirement System voted for shareholder proposals that pushed big banks to stop lending to fossil fuel companies.
In August, 19 Republican state attorneys general sent an open letter to BlackRock chairman and CEO Larry Fink accusing the money manager of putting its “climate agenda” ahead of clients, working together with climate activists and boycotting energy companies.
In response, BlackRock on Wednesday published a letter pushing back on these accusations, defended its backing of ESG investing, and asserted that climate change is a top concern for its clients.
“Your letter makes several inaccurate statements about BlackRock’s motive for participating in various ESG-related initiatives,” BlackRock wrote in the letter, which was signed by the firm’s head of external affairs, Dalia Blass.
Blass also wrote: “Investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes.”
Investors looking to make their portfolios more ESG-friendly may want to consider the American Century Sustainable Growth ETF (ESGY), an actively managed, nontransparent ETF that selects U.S. large-cap growth stocks based on positive fundamentals and ESG criteria.
ESGY uses a multi-factor model that assigns each security in the Russell 1000 Growth Index a financial score and an ESG score. The two scores are combined on an equal-weighted basis to create an overall score. The growth and value factors consider company earnings, cash flow, and changes in earnings estimates, price-to-earnings, and price-to-cash flow.
The model also takes into consideration price momentum. The portfolio managers utilize internal and third-party data to evaluate ESG characteristics. Final scores are evaluated on a sector-specific basis, selecting typically 70–90 stocks that exhibit the strongest scores in their respective sectors.
ESGY has an expense ratio of 0.39%.
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