BlackRock steps up spending on US lobbying in face of anti-ESG attacks

BlackRock sharply increased its spending on lobbying in the US last year as the world’s largest asset manager came under attack over its use of environmental, social and governance (ESG) factors in investing.

BlackRock disclosed spending $2.38mn in 2022 on federal lobbying, up 63 per cent from 2021. Within that, it more than doubled the amount of money it paid to high-powered lobbying companies to $1.2mn.

State lobbying registers show that the company also added five registered lobbyists in Texas and two in Florida, up from none in either state in 2020.

Republican politicians in those states have been leading the attack on investment groups they consider hostile to fossil fuel. Congress is expected to pick up the baton now that Republicans control the House of Representatives.

Texas has declared BlackRock to be hostile to fossil fuel and earmarked it for divestment. Florida’s treasurer last year pulled $2bn away from BlackRock over ESG, although the state’s pension funds are still using the money manager.

BlackRock said in a statement that it “works with US policymakers to ensure the voices of investors are heard in considering critical issues like retirement security, market structure and the safeguarding of investors’ freedom to choose financial products that best suit their individual needs and goals”.

Spending by money managers on lobbying tends to go up and down depending on the issues under discussion in Washington, with big peaks around bills focused on taxes, retirement accounts and securities regulation. Last year, Congress passed tweaks to the rules for employer-sponsored retirement plans and held hearings on securities regulation and index funds in addition to the growing focus on climate investing.

BlackRock’s lobbying spending trails Fidelity and Invesco, which have been among the top users of federal lobbyists among asset managers in recent years. Fidelity disclosed $2.4mn in spending in 2022, up 10 per cent, and Invesco reported $4.92mn, up 21 per cent. Asset managers in general lag the national leaders, which include Amazon, Meta and Pfizer, according to the Open Secrets website.

State Street, which was pilloried alongside BlackRock at a December hearing by Texas legislators on ESG investing, also increased its spending substantially in 2022, from $1.08mn to $1.76mn. The group, which includes a bank as well as an asset manager, pointed out that its spending in 2020 was similar to 2022 and said that the dip had to do with the timing of a large annual payment. It declined to comment further.

Rival index fund provider Vanguard slightly decreased its disclosed federal lobbying spending in 2022, dropping 14 per cent to $1.82mn, but it went from zero lobbyists in Texas in 2021 to two last year. Vanguard was excused from Texas’s anti-ESG hearing after it announced it was quitting the major global climate alliance, the Net Zero Asset Managers initiative.

“The asset management industry continues to work in a bipartisan manner in Congress to promote laws that put the interests of long-term investors first. Recent priorities have included tax policies that encourage saving and investing, the bipartisan retirement legislation ‘Secure 2.0’ and bills focusing on the SEC’s core missions of capital formation, investor protection, and orderly markets,” said the Investment Company Institute, an industry lobby group.

The ICI’s lobbying spending dropped 15 per cent to $4.58mn in 2022, which it attributed to retirements and changes to its contracts with outside companies.