Institutional Investors Demand Political Transparency from BlackRock

State treasurers and public pension funds say they fear an erosion of political stability after the attack on US Capitol.

Concerned with “the erosion of political stability” in the United States, a group of state treasurers and public pension funds overseeing more than $1 trillion are demanding BlackRock provide more transparency regarding the political contributions made by the world’s largest asset manager and its portfolio companies.

The group of institutional investors includes the state treasurers of Illinois, Massachusetts, Colorado, Oregon, Maryland, and Maine, as well as pension fund giants the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), among others. They made their demands in a letter to BlackRock CEO Larry Fink that was in response to the Jan. 6 assault on the US Capitol building by an angry mob seeking to keep then-President Donald Trump in power.

“A functioning democracy is foundational to a stable economy, and as institutional investors we rely on economic and political stability in order to generate consistent investment returns on behalf of our beneficiaries,” the group said in the letter.  

The investors said they believe that the attack on the Capitol adds “greater urgency” to the disclosure of corporate political spending and lobbying transparency and practices. They said they want to know how BlackRock will reform its corporate practices and investment stewardship “regarding the lack of transparency, alignment, and accountability in portfolio companies at which BlackRock votes proxies.”

The letter cited BlackRock corporate literature released in December regarding its investment stewardship team’s perspective on corporate political activities, saying the expectations the firm has set for its portfolio companies exceed its own political contribution disclosure.

“BlackRock fails to specify the purpose of its political participation, referring only to vague ‘contribution policies and public policy goals,’” said the letter, adding that BlackRock neither specifies its process for monitoring political contributions nor provides information about board oversight of trade association memberships. The group also noted that BlackRock ranks behind more than 150 S&P 500 companies in the 2020 CPA-Zicklin Index of Corporate Political Disclosure and Accountability.

“Had BlackRock followed its own policy recommendations, perhaps the firm could have avoided the reputational damage related to its political action committee (PAC) donating $85,000 to 15 legislators who continued to deny the results of the 2020 presidential election even after the invasion of the US Capitol,” the letter stated.

The group also accused BlackRock of “inadequate” disclosure of trade association payments, saying the relevant information on the firm’s website is outdated and fails to provide amounts paid or how that money was spent. However, the group said in the letter that it was able to find out that the political action committees of at least five trade associations that received contributions from BlackRock in 2019 made donations in 2020 to 64 members of the US House of Representatives and five US senators who objected to electoral votes on Jan. 6 following the invasion of the Capitol.

The trade associations that made the contributions are the US Chamber of Commerce, Securities Industry and Financial Markets Association (SIFMA), Insured Retirement Institute (IRI), Small Business Investor Alliance (SBIA), and National Association of Manufacturers (NAM).

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