Senate State Affairs – December 15, 2022

Senate State Affairs met on December 15 to hear invited and public testimony on the following interim charge:

• Investment Practices: Study the investment practices of financial services firms and how those practices affect the state’s public pensions. Make recommendations to ensure the state’s public pension funds are not being invested to further political or social causes.

This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Comments

• Bettencourt – Texas energy investments are strong and should continue
• Kolkhorst – None of the high-ESG funds outperform the lowest rated low-ESG funds; have a commitment to retired teachers & state employees to do better with our money
• Kolkhorst – Sobering that FTX got a higher rating than ExxonMobil
• Chair Hughes – Building on work done by SB 13, concerned by banks and others saying they will no longer fund O&G; SB 13 said if firms boycott O&G, TX will boycott them
• Chair Hughes – Have learned that it is deeper than boycotting, have learned companies are buying shares in O&G companies and then voting against O&G; involves investments from TRS and ERS; will hear from witnesses that foreign and other states and investing and making decisions
• Chair Hughes – Companies will say they are just responding to the market, but companies have pledged all of their money under investment; reached out to firms and asked firms to provide documents, issued a subpoena against one firm, committee is still getting documents from one firm

 

Investment Practices: Study the investment practices of financial services firms and how those practices affect the state’s public pensions. Make recommendations to ensure the state’s public pension funds are not being invested to further political or social causes.

Bud Brigham, Brigham Minerals

• Witness sworn in by Chair Hughes
• Affordable, reliable energy generates prosperity
• America has never ratified the Paris agreements, could be treasonous for companies to accede to a foreign treaty
• Capitalism has been fundamental to America exceptionalism, is sustainable; ESG is not
• Per US Energy Information Administration (EIA) projection, O&G demand is not going away, is increasing by 2050
• Energy producers have benefited all stakeholders, including environmental stakeholders
• Texas University philosophy professor said ESG is the politicization of commerce
• Highlights incident where investment bank wanted him to tweet bullet points about climate change and that company activity should align with Paris Agreement and should achieve net zero emissions by 2050, disagreed with these points
• Already in an emissions transition, happening due to the private sector; seeing in Europe that when government gets active, central planning doesn’t work; seeing higher emissions & energy costs
• ESG is disruptive and puts us on a path to Europe
• Kolkhorst – Asks for the quote from the UT philosopher again
  • Professor Greg Salmieri, said ESG appears to be the politicization of commerce
• Kolkhorst – Name of the bank?
  • Credit Suisse
• Kolkhorst – Had you sign bullets?
  • Asked me to tweet out 4 bullets
• Kolkhorst – Asked you to tweet it and then you could get the loan?
  • Yes, offended by our political views
• Kolkhorst – You’re based out of? How long have you been in O&G?
  • Austin, 40+ years
• Kolkhorst – You didn’t have to sign an agreement, you had to tweet it?
  • Yes; banker was trying to be commercial and create value, investment committee member wanted the tweeted bullets relating to the climate accords
• Kolkhorst – New to me to tweet to secure a loan
  • Mixing politics with business is destructive
• Chair Hughes – Wasn’t a question about if this was a good deal for the bank, you’ve generated value for the bank?
  • Over $2b
• Bettencourt – You made a comment about capitalism being fundamental to American exceptionalism, there is a fiduciary duty too; did they even know you had a twitter?
  • Investment committee member followed me
• Bettencourt – End of the story?
  • We found a different bank
• Bettencourt – Media about Chinese companies investing and using ESG ratings?
  • Yes, have an example of a firm that uses slave labor having a high ESG
• Bettencourt – Probably western China and the Uygher; having an ESG structure imposed on what should be a normal market discussion of what’s best for consumers, given that we are leading in environmental technologies, preposterous that a company like you is threatened out of a deal
  • Yes, US innovates because we have private property and economic liberty, ESG movement is a direct attack on that private property
• Bettencourt – In our social norms of no child labor and no concentration camps, not the rule in China, yet an ESG rating can be higher for a Chinese company than for US energy companies
  • Exactly
• Bettencourt – Thank you for supporting that capitalism is fundamental for American exceptionalism
• Chair Hughes – Pirkey Power Plant & lignite mine is close by, has decades of life left; AEP wants to shut that plant down prematurely while it still has life; have evidence that AEP has been targeted by foreign firms
• Kolkhorst – Not seeing the same standards of ESG being applied to across the world; China put out 25k tons versus US’ 2.5k
• Kolkhorst – China, Saudi Arabia, Russia, and India are not paying attention to ESG, putting financial obligations first
• Hall – Threat to electrical system is all over the state, dozens of coal plants around the state that, if they were online, we would not have discussions about grid reliability; policies have led us to the brink of what could be a major disaster for Texas with power systems

 

Dahlia Blass, Senior Managing Director BlackRock

• Witness sworn in by Chair Hughes
• Provides history of BlackRock and overview of operations, over $300b invested in TX; BlackRock understands the importance of the money held, have delivered above benchmark returns for 5 years
• Fortunate to have large client base with unique goals, ultimately follow investment instructions from clients
• Had $107b invested in TX energy companies last year alone
• Believe in investor choice, investor choice should extend to voting & proxy voting; more clients have expressed interest in voting and company choice
• All public pension plan clients are eligible for voting choice
• Study dozens of material risks, including climate risks, and impact on portfolios
• Chair Hughes – Head of external Affairs?
  • Correct
• Chair Hughes – Is BlackRock an asset manager itself, or through one of its subsidiaries?
  • Registered investment advisor with the SEC
• Chair Hughes – What does it mean to be an asset manager?
  • Clients give us their money and invest it in accordance with their mandates
• Chair Hughes – BlackRock’s money or other people’s money?
  • Other peoples
• Chair Hughes – How long have you worked at BlackRock?
  • About a year and half
• Chair Hughes – Aside from BlackRock, Inc., other entities?
  • is the public company, BlackRock Advisors is the advisory company registered with the SEC
  • Also have subsidiaries in other countries where we operate
• Chair Hughes – BlackRock, Inc. has other funds?
  • BlackRock Advisors has the funds that they manage
• Chair Hughes – Each fund has its own board?
  • Each fund has a different board, not one central board
• Chair Hughes – Your main responsibilities as Head of external Affairs?
  • Head Global Public Policy Group, Corporate Sustainability, etc.
• Chair Hughes – What does “investment stewardship” mean to BlackRock?
  • Have a large group that directs votes on behalf of clients who are in proxy voting
  • One centralized function for BlackRock, local experts in different markets; stewardship votes are looked at every year
• Chair Hughes – Do you have responsibilities related to ESG engagement?
  • Sit on an advisory body for the stewardship team, very familiar with what they do
• Chair Hughes – Many questions will be about ESG engagement; you are prepared to answer on behalf of BlackRock and the statements they made?
  • Yes, will do absolute best to answer questions
• Chair Hughes – Will you let us know when you are not able to speak?
  • Yes
• Chair Hughes – Requested witnesses who had been with BlackRock for a long time, but grateful you are here
• Chair Hughes – Do you have responsibilities in communicating with US and foreign governments?
  • Yes
• Chair Hughes – Who do you report to?
  • CEO Larry Fink
• Chair Hughes – BlackRock’s website says its first priority is fiduciary obligation, tell us what that is?
  • Required by law to act in best interest of client within the scope they’ve outlined
• Chair Hughes – Fiduciary Duty of Loyalty?
  • Try to get the best risk-adjusted returns we can; owe clients the duty of loyalty and care, acting in their best interests
• Chair Hughes – Duty of Prudence?
  • Relates to pension clients, comes to same core of acting in their best interests to deliver best results we can
• Chair Hughes – Last year, KY, LA, etc. AGs issues opinion that investment managers must act in financial best interests of clients; would you agree?
  • Yes
• Chair Hughes – Which interest does ESG investing serve? Welfare, benefit of humanity, financial interest?
  • We look at financial risks & opportunities for clients to deliver best risk-adjusted returns we can
• Chair Hughes – What is Climate Action 100?
  • Investor initiative that looks at world’s largest emitters, considers climate change issues
• Chair Hughes – Presents sign-on statement for Climate Action 100, lays out BlackRock’s interest; is the purpose for BlackRock and other signatories to pursue investors in accordance with Paris Agreement?
  • Pursue investments that are relevant to clients
• Chair Hughes – Pursuing investments to reduce greenhouse gasses in accordance with Paris Agreement? When BlackRock signs this document, is this not true?
  • You also received letter stating BlackRock also acts independently in accordance with client interests; in dialogue with others on climate actions
• Chair Hughes – Letter contradicted this statement and dozens of others
  • Letter made it clear we are fiduciary investments on behalf of clients, we do not make commitments, clients make commitments
• Chair Hughes – What is BlackRock’s view on the Paris Agreement?
  • We look at transition to low-carbon economy, believe that if a transition could benefit client portfolios we provide this info, but ultimately the decision of how to invest is the client’s
• Chair Hughes – Website says BlackRock joined climate action 100 to ensure largest greenhouse gas emitters reduce emissions, should the website be changed?
  • Participate in Climate Action 100 to have dialogue, BlackRock invests in interest of clients
• Chair Hughes – Many statements like this?
  • BlackRock has issued many statements
• Chair Hughes – Website says nothing about dialogue; is the website statement true or false?
  • If you pulled it from the website, then it is on the website
  • BlackRock position is that we are members of the group to engage in dialogue on issues important to our clients
  • Appreciate that people have different views on issues of engagement and voting, which is why we pioneered voting choice
• Chair Hughes – Curious about BlackRock joining Climate Action 100, statements are pretty clear
• Kolkhorst – When did BlackRock join Climate Action 100?
  • 2020
• Kolkhorst – Trying to understand timing and fairness of it; trying to stand up for retired teacher and employee investments
• Kolkhorst – In 2015, CEO Fink was invited to advise Chinese Communist Party to address economic downturn, Mr. Fink said China would be an opportunity for BlackRock & investors; BlackRock won first CCP approval to start first wholly owned foreign business in China; does this move make BlackRock prioritize and incentivize Chinese companies, make BlackRock prioritize ESG, and whether ESG is something deeper and darker
• Kolkhorst – What do you say about that timing? Do you apply these standards to investments in other countries?
  • We apply stewardship principles globally
• Kolkhorst – So those companies get the same treatment as our US companies, ranked the same way, even though somethings are discounted, how workers are treated, how much is burned? Climate Action 100 is applied to every company in every country?
  • ESG scoring is not ours, with respect to our stewardship principles, engage and vote according to principles that are transparent and public
  • Chinese business is very small part of the portfolio, achieved under Mr. Trump’s trade agreement, local business
• Bettencourt – how do you value Permian Basin projects versus a solar project in the area
  • Financed Webster project @$45m
  • One client has produced over $2b in returns in less than two years
• Bettencourt – Has BlackRock ever encouraged anyone to tweet out ESG related ideas before?
  • No, BlackRock is not a bank
• Bettencourt – BlackRock acts as a service provider?
  • Have retail funds, private funds, and institutional funds, clients have directives
• Bettencourt – Joining Climate Action 100 seems to be a demonstrative view of company policy?
  • There is a letter accompanying the Climate Action 100 clarifying BlackRock’s direction from clients
• Bettencourt – No bias at all for a solar versus O&G project in the Permian Basin?
  • We invest across the chain
• Bettencourt – Asking about bias, you have absolutely no bias? No tilting towards an ESG score?
  • Our bias is to get best risk-adjusted returns for clients
• Bettencourt – You were ranked 5th out of 12 in Florida, without ESG how much higher do you think you would be?
  • We do not ESG scoring for investments, some clients ask to note ESG
• Bettencourt – Then why were you fired in Florida? All the literature is about ESG
  • Don’t know why we were fired when we were performing really well
• Bettencourt – Financial literature, etc. is all about ESG, and
  • Performed very well for Florida and proud of performance in TX
• Bettencourt – Disagree with characterization as “well,” if you don’t consider ESG why are you being fired and
  • For one Texas client we were best manager
• Bettencourt – Asking about Florida, you were fired at 5th out of 12; clearly all literature financial and popular says it’s about ESG
  • We performed well for the state of Florida, delivered investment performance; ran those investment in accordance with their mandates
• Bettencourt – Mandates that you would be 5th out of 12
  • We produce concrete results
• Bettencourt – No idea why you were fired?
  • Unsure why we were fired when we were performing for the state of Florida
• Kolkhorst – What is the academic engagement metric?
  • A lot of research takes place in asset management space, when academics are publishing research in the space we engage and help with research when we can
• Kolkhorst – Do you disclose who you engage with?
  • Tends to be particular professors, BlackRock also publishes; recent initiative
• Kolkhorst – Would like info on specifically when you became active in academic engagement, asks Chair Hughes if it would be in order to ask for list of universities
• Chair Hughes – Can send request to attorneys or you can commit to provide it
  • More than happy to provide universities and topics
• Kolkhorst – Would be good to know, how long they’ve had the academic engagement, what universities, and what professors
• Hall – What is the primary objective of BlackRock business model? Is it to maximize investments
  • Producing best risk-adjusted returns
• Hall – Is there another objective?
  • No
• Hall – Primary objective is maximizing returns?
  • Yes
• Hall – What is it about ESG returns that is important to maximizing investments
  • When looking at ESG, look at material risks & opportunities
• Hall – How does decarbonization play into that?
  • Good governance is one of the foundational aspects, well governed company will produce most return for clients
• Hall – Environment is one of the keys of ESG, US has one of the cleanest in the world?
  • Provides example of investing on Florida shoreline, same project, but one is 2 feet above and one is at sea level, 2 feet above has less risk
• Hall – How did BlackRock embrace ESG policies, was this brought to you or developed internally?
  • Governance has been a core since founding
  • Material E & S risks have been required to be disclosed for some time, not new pieces in capital markets
  • New pieces is more regulators globally looking at more consistent disclosures
• Hall – Companies embracing ESG perform more poorly than those who don’t; why would you embrace these policies?
  • In the US we have 66 ESG funds because investors demand them, out of over 600 funds globally, roughly 5%
  • In terms of performance, ESG and non-ESG is apples to oranges; internally BlackRock study found ESG funds are outperforming 75% of the time
  • Appreciate that clients have different views, which is why BlackRock offers investment and voting choice
• Bettencourt – Presents statement from Florida CFO Jimmy Patronis stating Florida is divesting because BlackRock is doing other things aside from producing returns
  • Had seen that
• Bettencourt – Then why did you say you had no idea why you were fired?
  • No idea because we were producing for Florida, 89% of active fixed incomes performed above peers
• Chair Hughes – Seems that BlackRock says whatever it needs to; do you still disagree with the statement on BlackRock’s website?
  • Can say that letter accompanying Climate Action 100 clarifies, do not commit client assets
• Chair Hughes – Presents January 2020 letter from CEO Larry Fink; letter comes out annually, what is the purpose of the letter to CEOs?
  • CEO writes them as a fiduciary to clients, uses letters to share his insights into long-term drivers of value; BlackRock is a long term investor & letter reflects that value
• Chair Hughes – Second paragraph states climate change has become a factor in company’s long term prospects, letter states we are on fundamental reshaping of long term finance
• Chair Hughes – Before the letter came out, what was the purpose of finance
  • Purpose of capital finance has always been and remains producing returns
• Chair Hughes – What does it mean when it says a fundamental reshaping of finance
  • Transition to low-carbon has opportunities and risks and if managed well will mean better returns
• Chair Hughes – Purpose of finance before the letter was what?
  • Purpose was and is to find opportunities for finance, purpose with respect to capital markets remains the same
• Chair Hughes – Presents Reuters article stating BlackRock and Vanguard only backed about 10% of climate-related shareholder resolutions in 2018 and 2019, was climate change a short term risk in 2018 and 2019?
  • Not sure I understand the question
• Chair Hughes – Was climate change a short term risk to companies in 2018 and 2019?
  • BlackRock takes a long term view in terms of risks
• Chair Hughes – Not suggesting BlackRock ignores short term risks?
  • No, but core is to look long term
• Chair Hughes – In 2018 and 2019 was climate change a long term risk?
  • Climate and other environmental risks have been material since the 70s
• Chair Hughes – Confused on the fundamental reshaping statement
  • Reshaping is looking at unpriced risks and looking at opportunities in the transition, Blackrock believes opportunities it could produce better risk-adjusted returns for clients
• Kolkhorst – Asks Bettencourt, did Florida have a bill to move funds out of BlackRock or was it unilaterally done?
• Bettencourt – Treasurers of states pulled money from BlackRock, Florida CFO removed $600m and put a custodial freeze on $1.4b; stunned that BlackRock representative doesn’t know of reasons
• Kolkhorst – Legislative action, executive?
  • Done by the Comptroller
  • Very aware of what Florida CFO published, not aware of why he did what he did given BlackRock was performing
• Kolkhorst – Does anyone in the state have ability to do this?
• Chair Hughes – SB 13 does allow Comptroller to look at some things, but TX is more decentralized and may need legislative action to make some decisions
• Chair Hughes – After joining Climate Action 100, BlackRock voted for 50% of all climate resolutions?
  • Voting record is public, don’t dispute that
• Chair Hughes – So before 2020, BlackRock supported 10%, after joining Climate Action 100, 50%
  • BlackRock voting supports management 90% of the time, have seen a correlation between voting and stock performance
  • BlackRock saw many proposals this year that were restrictive of management; rare case where BlackRock is not supportive of management

 

Lori Heinel, Global Chief Investment Officer SSGA Global Advisors

• Witness sworn in by Chair Hughes
• Provides overview of SSGA investments & operations, $12.6b for defined contribution retirement plans, $18b for public entities
• SSGA is a fiduciary, required to act as fiduciary, including with ESG; company specific ESG factors have potential to impact performance of managed investments; sole focus is long term value growth
• SSGA does not divest, does not pick and choose what to invest in; goal is for all companies in an index to perform well
• Do not discriminate against any company or direct companies to take actions
• $144b globally in energy-related securities, $65b in Texas
• Do vote proxies, many are routine matters; sometimes votes are more contentious, have allowed voting proxies for many clients for some time and recently announced voting choice will be extended
• Any SSGA investment advisory can choose to invest in O&G at their discretion, have an only energy index with O&G as top investments
• Chair Hughes – Do you anticipate leaving before hearing is concluded?
  • Will make myself available as long as required
• Chair Hughes – How long have you been with State Street
  • For 5 years
• Chair Hughes – Corporate organization?
  • State Street Global Advisors (SSGA) is the asset management of State Street Corporation
• Chair Hughes – SSGA independent with own board of advisors?
  • Not independent, have individual boards for different funds
• Chair Hughes – Do you oversee asset stewardship for SSGA?
  • Yes
• Chair Hughes – Separate asset stewardship?
  • Not for each fund, is centralized
• Chair Hughes – Who do you report to?
  • Chief Investment Advisor, CEO
• Chair Hughes – Fair to say you’re a Senior Advisor?
  • Sometimes do this
• Chair Hughes – Want to ask about ESG, Ceres; who/what is Ceres?
  • SSGA’s thinking is very aligned with Mr. Brigham’s testimony earlier; SSGA recognizing climate change is real and CO2 emissions contribute, evidence suggests issues are becoming more acute
  • SSGA’s interest in these entities is to have a voice in terms of what investors need to be aware of and how companies are managing attached risks
  • Want to understand what the best thinking is about climate change, trying to understand how various risks are becoming important
  • Also looking at other risks like physical risks, reputational risks in certain markets (e.g. incremental taxes in Europe), crisis risks, consumer behaviors, etc.
• Chair Hughes – Cerus is a north American investor network?
  • Bring together groups to have conversations on these types of risks write papers and make positions/propositions
  • Retain independent judgement on propositions they bring forward
• Chair Hughes – Cerus formed Climate Action 100; reads from their website on their mission statement; reads SSGA document in joining CA 100
  • Interest in understanding what the companies’ risks are related to climate and their handle on that
• Chair Hughes – Reads from a document about ESG investing; SSGA noted the single most significant effort has been the election of Joe Biden; politically motivated?
  • Was not political at its core; interest is to look at this collectively for concerning issues related to climate
• Chair Hughes – Labor Department rule related to ESG investing during the Trump Administration?
  • Yes, rule was put in place as LD believed investors were putting climate first
  • Had concerned about how the rule was characterized; undue burden on plan sponsors
• Chair Hughes – Lobbying efforts regarding that rule?
  • Yes, submitted comment on that and talked to policy makers on that rule
• Chair Hughes – Did SSGA lobby to repeal this rule and work on the new rule by the Biden Administration?
  • Did provide input; stance would be the same as it was under previous administration
  • Share committee’s concerns that ESG has become highly politicized; focus on material risks
• Chair Hughes – Can you get us all your lobbying materials related to this rule? Committee would like to see any written materials on this
  • Yes
  • Blass – Did submit a comment letter on both; and yes
• Chair Hughes – Shareholder primacy versus stakeholder primacy?
  • Are now more tangible examples and more access to; are good investment principles that sometimes get reoriented
  • For example, see employees today are interested in working with companies that align with them
  • Telling companies to be aware some things will have implications for their business models
• Chair Hughes – Communications with personnel of CA 100 before joining?
  • Can get that to you
• Chair Hughes – Who made the decision to join CA 100?
  • Would be an executive decision
• Chair Hughes – Any climate action groups ask SSGA to join CA 100?
  • Discuss with various groups
• Chair Hughes – Foreign pension funds or foreign governments ask SSGA to join CA 100?
  • Do not know the answer to that; can get that information to you
• Chair Hughes – Did any other pension funds suggest SSGA join CA 100? Talked to any pension clients on this decision?
  • Would have; do not have details, but can get that to you
• Chair Hughes – Did SSGA check with Texas pension funds before joining CA 100?
  • Not sure, can get that information to you
• Chair Hughes – Chair’s intent to take a brief lunch break; will return to this conversation and about board votes, will hear from IIS and come back to Black Rock and SSGA

 

Lorraine Kelly, Institutional Shareholder Services

• Best known for agnostic proxy voting services aligning with client’s investment philosophies
• Offer numerous voting policy options to meet needs of diverse client base
• Policy reflects current marketplace; open to input from investors, corporations, etc.
• Those whose investment policies to not align, offer custom recommendations
• Are agnostic to whenever clients approve, reject, or are neutral to specific policies
• Have been proxy advisor to TRS and ERS; let down ERS in assisting them with several vote recommendations; are actively engaged to ensure similar issues do not happen in the future
• Birdwell – Are an independent company?
  • Are a private company; have an arms-length relationship with shareholders to ensure there is no undue interference
• Bettencourt – ISS is agnostic, how advise ERS four times to vote against Texas energy projects?
  • Did not have enough dialogue to understand their view on that issue
• Bettencourt – Where did the policy come from?
  • Was a custom policy put in place for ERS
  • Policy was interpreted to vote in that direction; were some unique parts of the SEC rule change loosened the reigns on shareholder proposals and new issues hit the ballot
  • As soon as we became aware of the issue, quickly pivoted the policy
• Bettencourt – Pivoted is an understatement; Texas has energy at its core
• Bettencourt – Asks how this decision could have been made?
  • Withholding fossil fuel financing was the new proposal; would be aligned with net zero
  • The one who made this decision ultimately is no longer with our firm
• Bettencourt – Why was your company not fired at this point in time? Was corporate bias
  • If ERS and TRS decide to fire us, that would be disappointing; hope to ensure this does not occur again
  • Was not corporate bias, was a mistake; do not have an agenda
• Bettencourt – Recommend ERS and TRS terminate this group; disagree with ESG scoring system
• Bettencourt – Will have ERS up at the chairman’s discretion
• Birdwell – Company is agnostic, but recommending the types of votes?
  • Are a service company to the investors; investors select the policy
• Birdwell – What direction from the state led you to make these decisions?
  • Had a policy document from the state
• Kolkhorst – Reads ISS policy guidelines; 2023 voting guidelines note they will vote against significant greenhouse emitters; SB 13 prohibits this
  • You read our benchmark policy; neither pension system is using our benchmark policy
• Kolkhorst – Notes FTX that got a higher governance score that Exxon based on ESG
  • That was not an ISS score
• Kolkhorst – Is a major overall issue; ESG is changing the richest state in the nation
• Kolkhorst – Are only two companies who do this type of thing? Why?
  • ISS and Glass Lewis; is a hard job to do
• Bettencourt – Reads 2022 ISS benchmark policy; is activist against oil and gas, so your company is not agnostic
  • Policy is arrived at based on surveys from stakeholders; if clients do not want to use our benchmark policy
• Hall – What is the purpose of your participation and your advise?
  • To enhance shareholder value
• Hall – What data do you use to base your recommendations that decrease in greenhouse gasses would enhance shareholder value
  • Looking at if there is a risk associated with
• Hall – Is this from the broad marketplace or a selected marketplace?
  • From the broad marketplace
• Hall – Would like to see that data; would like to be provided with that information
  • Is mostly about the risk management, not only about performance
• Birdwell – ISS would not override a vote for members who are not on the GA 100 list?
• Birdwell – If using your financial power to compel behavior of individuals, that is not a market
  • Have many clients that use specialized policies; can override our recommendations
• Birdwell – On those four occasions ERS and TRS voted, had the ability to override your recommendations?
  • Believe they did
• Chair Hughes – Benchmark was developed with market input?
  • Not at liberty to confirm or deny clients; policy surveys do not just go to our clients, but to the marketplace as a whole
• Chair Hughes – How much input came from CalSTRS and CalPERS?
  • Will need to discuss this with counsel
• Chair Hughes – ISS is not here under subpoena, but will do so if needed
• Chair Hughes – Ask your lawyers to find out if CalSTRS or CalPERS participated in development of the benchmark policy
• Chair Hughes – Have been engaged by BlackRock and SSGA to push these climate goals?
  • Have not been engaged by BlackRock and SSGA
• Chair Hughes – Will follow up with your lawyers about that as well
• Chair Hughes – Aware that conservative states may not agree with your benchmark policy?
  • Yes, why we offer different options

 

Lori Heinel, Global Chief Investment Officer SSGA Global Advisors

• Chair Hughes – SSGA engaged HSBC to limit financing for coal plants in 2021?
  • Heinel – Yes, are times when we try to help management address issues that are in their best interest and where the risk might be more constraining
• Chair Hughes – Saying there could have been a worse proposal?
  • Heinel – Proposal itself perhaps may have been more limiting
  • General engagement is to understand their business practices and attached risk
  • Do not prescribe to companies that they have to do
• Kolkhorst – Ultimate goal for your company seems to be phasing out coal plants and oil and gas
• Chair Hughes – We need all documents related to this engagement with HSBC
  • Push back in our ultimate goal being to eliminate fossil fuels; is about climate change associated risk
• Chair Hughes – Suggesting you are a moderating voice in this conversation?
  • Yes; get positive feedback from energy companies
• Chair Hughes – SSGA had a political bias regarding voting with JP Morgan and Chase
  • Was less about financial analysis of business practices, is about disclosure
• Chair Hughes – Are not votes and pressure like this
  • Heard he was being compelled to say things he did not believe for a business opportunity
• Chair Hughes – Does not discourage banks from providing financing for fossil fuel projects?
  • Banks make their own business decisions

 

Dahlia Blass, Senior Managing Director BlackRock

• Chair Hughes – Do not prescribe specific greenhouse gas reduction emission reduction targets? Is in a letter from the former CEO that suggests otherwise
  • Believe the two are consistent
• Chair Hughes – BlackRock voted against Whitehaven Coal board of directors because they did not include greenhouse reduction targets?
  • Was not there at the time, but is about disclosure of information
• Chair Hughes – BlackRock seems prescriptive in greenhouse gas reduction targets
  • Is about the regulatory framework; looking for companies to explain how they are discussing these litigation risks
• Chair Hughes – If they disclose a plan that disagrees with your benchmark, they are not punished?
  • Not giving them a roadmap, but seek to understand how they are viewing it
• Chair Hughes – BlackRock also voted against the chair of TransDigm and Exxon Mobile’s directors
  • The vote against Exxon was based on governance and performance; had lost 60% of its value in the 5 years
• Kolkhorst – When was Exxon’s vote? Turned it around in less than a year?
  • 2021; notes Whitehaven is not a U.S. company
  • Have $27b invested in Exxon invested on behalf of our clients
• Chair Hughes – This is our concern; wish you did not have as much sway with them

• Chair Hughes – NYC Comptroller sent a letter to CEO Fink on behalf of the NYC pension funds citing several climate commitments BlackRock has made, stated Blackrock has recognized climate change as an investment risk, defining factor in company’s long term prospects, declared investment policy that climate sustainability and risk-adjusted portfolios can bring better returns, BlackRock has been asking of integration of net zero plans; does this accurately describe BlackRock’s position?
  • In the letter to NYC Comptroller it explains BlackRock’s participation, in line with what was said earlier
• Chair Hughes – Sounds like NYC Comptroller is frustrated with Blackrock, appears BlackRock says what they think who they are speaking to wants to hear; asking not just for public documents, but more documents
  • Can provide letter in response to the committee
  • Clients are asking for sustainable portfolios, clients ask for portfolios not taking climate risk into account; clients are choosing what is lining up with their goals
• Chair Hughes – NYC Comptroller makes demands of BlackRock in the letter, incl. publishing implementation that makes clear goal of making net zero, phasing out high emitting assets, and supporting climate action by limiting fossil fuel projects
• Chair Hughes – Have seen multiple statements from BlackRock that commitment is across the entire portfolio
• Chair Hughes – Has Blackrock met privately with NYC Comptroller?
  • NYC Comptroller is a client, so we have met with him
• Chair Hughes – Any agreements based on this letter?
  • We handle client’s mandates for their assets
• Chair Hughes – Has BlackRock met these demands from the NYC Comptroller?
  • Clients make their own commitments, and we manage to their commitments
  • BlackRock as a public issuer has made commitment to reduce our carbon emissions, but different from assets managed via client mandate
• Chair Hughes – So statements that this would be across the entire portfolio?
  • BlackRock has made it clear that we are fiduciary and bound by client mandate
• Chair Hughes – Requirement 7 from Net Zero Asset Managers speaks to escalation
  • In the CA100 letter BlackRock makes clear it is bound by client mandates
• Chair Hughes – When you have made pledges to manage all assets along these lines, you didn’t mean it?
  • BlackRock participates in these organizations to be part of the conversation and understand issues important to clients
• Chair Hughes – NYC Comptroller said he would pull $40b
  • Not at liberty to discuss private client statements
• Chair Hughes – Has BlackRock met those demands?
  • Will provide you with the letter BlackRock sent in response
  • BlackRock is a fiduciary for clients, purpose is to maximize investments for clients; have done what is possible to maximize voting choice
• Chair Hughes – When did BlackRock begin voting choice?
  • Has taken roughly 4 years of work to launch in January
• Chair Hughes – So launched after red states complained?
  • Announced in 2021, but has been in the works for some time
• Kolkhorst – $40b invested in BlackRock invested from NYC pensions, do we know how much we’ve invested from ERS and TRS into BlackRock and SSGA?
  • Don’t have the number, for active mandates for pension plans, we’ve outperformed benchmarks for the last 5 years
• Kolkhorst – Appreciate the difficult position, possible that firms can’t serve two masters; have seen NYC Comptroller’s demands, SB 13 was passed by the TX legislature; maybe it should be more along the Florida lines where we say you’ve made a decision and take money elsewhere
• Kolkhorst – Charge is to make sure public pension funds are not being invested to further political or social causes
  • Heinel, SSGA – Have had similar conversations internally, have encouraged teams not to think of ESG as a performance enhancer, though they are risk issues
  • If we do believe that we have to get arms around climate change, though maybe there are some that don’t believe this, then the question is one of transition
• Kolkhorst – My concern is that we’re not seeing the same efforts globally, e.g. China development of O&G resources, but we’ll decommission coal plants such as AEP is being forced to do by ESG factors; others are putting their countries first while we’re bending to scoring
• Kolkhorst – Moving toward a conclusion that your two firms shouldn’t invest in because we have different goals, but jury is still out on if you don’t drive an electric car 60k, your footprint is actually larger; maybe it’s time to take investments elsewhere and be more direct with ERS and TRS
• Chair Hughes – Makes a lot of sense
• Hall – That’s in line with the question I asked earlier, seeing things with no credible rationale; where is the empirical data that net zero is good for the bottom line, also other things in that analysis; analsysi of green energy leaves out huge emissions sources like raw materials, disposal, etc.
• Hall – Would like to see the written analysis that shows how these will be a direct benefit
  • Blass, BlackRock – Based on our research, believe that an orderly transition to a low-carbon economy is much more beneficial to a client’s portfolio
  • BlackRock’s one master is the client, proud of the performance we’ve generated for Texas clients, those in TX that held BlackRock stock have seen significant increases in value; have beaten benchmarks for 5 years
  • Way to meet unique needs of clients is to provide them with choice, have $107b invested in public energy companies, do not boycott O&G
  • In Florida we outperformed benchmarks for 5 years, difference between BlackRock and lead was less than a quarter percent
• Chair Hughes – Have a coal plant in Marshall that AEP is going to close, BlackRock has interest in AEP, coal plant and mine have years left; parent company of Pirkey Power Plant says it is a reliable and resilient asset; did BlackRock engage with AEP about the retirement of the Pirkey power plant?
  • Not sure about that, have engaged with AEP management
• Chair Hughes – Isn’t AEP one of the focus companies for CA100?
  • Would have to get back to you on that, have our own climate focus group
• Chair Hughes – CA100 says it is one of your focus companies, has BlackRock communicated with AEP that CA100 expects retirement of coal plants by 2040?
  • Would have to get back on this question, but BlackRock acts independently
• Chair Hughes – BlackRock participates in GFANZ per the website; provides members with tools and incentives pathway to net zero; BlackRock coauthored an article on early retirement of high emitting assets
  • Research paper, it goes through assumptions that you would need to get to net zero, important for clients to understand for cost benefit analysis
• Chair Hughes – Your website says you co-lead GFANZ; when you write these papers, do you expect people to read them?
  • BlackRock was one participant, out of two columns of entities,
• Chair Hughes – Do you agree if companies manage down greenhouse emitting entities and transfer to a less climate ambition?
  • Yes, don’t believe in divestment
• Chair Hughes – This means shutting down rather than divesting and selling
  • Manage down climate emissions
• Chair Hughes – Manage down?
  • Emissions; managing emissions is not shutting down, does not translate to asking companies to stop producing O&G
  • Continue to invest and believe they are part of the solution for investors
• Birdwell – Managing something down to zero is similar to the doctor letting the patient die and claiming success or picking up a bill to kill it; BlackRock gets to claim they invest in the energy industry so they don’t deal with the boycott aspect, but functional malpractice if you’re letting the industry die
• Hall – How do you show that if you manage down to zero, profits will go up
  • Managing to net zero ensure that carbon your emitting is offset
• Chair Hughes – You’re saying that mange down in the context of coal fired power plant does not mean shutting down?
  • When we’re looking at transition to a low carbon economy, looking at multiple aspects like renewables, carbon capture, etc.
• Hall – You said your objective was to maximize investments, now your objective is zero carbon emissions
  • Was answering was net zero is, objective of BlackRock is to maximize revenues; looking at these aspects to maximize revenue for clients
• Hall – How does reducing carbon to zero increase net worth, revenues?
  • We’ve have done analysis that shows orderly transition to net zero is much better for client portfolios rather than disorderly
• Hall – What is an orderly transition?
  • One that is thought out and paced out
• Hall – So if they take ten years to shut down, that’s better than 5 years?
  • BlackRock looks at long term trends, regulations, etc.
• Hall – You’re telling us if a board is not going to be voting for zero carbon emissions they’ll be shut down
  • We look at macro-economic trends
• Hall – Not asking what you look at; how is net zero in the best interests?
  • We don’t tell companies what to do, we ask them how they manage risk
• Hall – But why is net zero carbon even one of your concerns
  • We look at transition and fiscal risks with respects to climate; transition risks can include regulations and we look at how companies manage against regulators moving on climate and disclosure
• Hall – What does zero carbon emission have to do with that that causes you to tell a company it could maximize value?
  • Part of the transition risk, we ask them how they are managing risk
• Hall – How is net zero part of asset value?
  • Making sure companies are looking at regulatory changes in the short, medium, and long term is important to ensure they are continue to perform long term
• Bettencourt – No fact or supposition of fact that managing down a coal plant means shutting it down; when you manage a coal plant to zero, it means shutting it down
• Bettencourt – In China they are talking about gigawatts of construction; I don’t see how either of these companies are in compliance with SB 13, dealing with companies who seem to have made up their minds about what we should be doing, and they’re incorrect; believe that in Florida Gov. DeSantis will end up with a bill similar to SB 13
• Bettencourt – Employees are the ones who will be affected by ESG mentality
• Kolkhorst – What is your stance on natural gas plants?
  • Heinell, SSGA – Don’t have a stance on any particular energy source, only interest is in making sure companies are processing what climate change might mean for them
  • About making sure companies understand physical, consumer, reputational, etc. risks
• Kolkhorst – I understand you’re telling companies that they can chase $2t via the green new deal; but TX can’t operate on solar & wind alone; goal is to keep Texas competing and without coal plants would not have survived the summer
• Kolkhorst – Will build more baseload, takes to long to build nuclear, so going with O&G; standards are being set that the whole world is not following; time to pick up TRS & ERS investment and move & maybe Texas will start changing opinions of investment firms
• Birdwell – Not one that buys climate change; don’t want to see financial leverage used to put dispatchable energy on hospice
• Chair Hughes – Going back to SSGA, document from 2022 entitles “Energy Transition: Fast Forward or Slow Down?” Pg 2 says focus on decarbonization from O&G majors may move O&G investment down
  • Ultimately focused on what investments might be good for a company, writer is in Europe and there are pressures to decarbonize; basis of the thesis is energy companies will be getting pressure from regulators in Europe
• Chair Hughes – In the Annual Climate stewardship Review from 2020, CA100 supported 12 shareholder proposals in 2020 incl. lobbying for a policy framework in line with Paris Agreement
  • Context for a lot of this is that the regulation space is varied, many jurisdictions are proposing draconian disclosure and other regulations
  • Spirit is that companies need to participate in the process to make sure there is coherence and cost of compliance isn’t an undue burden
• Chair Hughes – So it sounds like you’re saying this is suggesting companies lobby against Paris Agreement? Reads the opposite
  • Many companies have adopted their own net zero commitments, the question resulting is how we manage through the regulatory environment requiring disclosure, etc.
  • There are many examples where regulations would be counterproductive and wouldn’t help investors
• Chair Hughes – This language is about encouraging companies to lobby, are you concerned they’re lobbying too fast
  • It is about lobbying towards the disclosures they need to abide by
• Chair Hughes – This is advising companies on how to exercise political speech
  • Trying to get their voice into how issues get disclosed, reported on, etc.
• Chair Hughes – Many members of CA100 are foreign asset managers and this about lobbying and political speech in the US?
  • Affects all companies globally, would affect American companies
• Chair Hughes – SSGA Chevron engagement regarding call with BNP Paribas, engagement for voting purpose & involves new proposal in alignment with Paris Agreement; notes say Paris agreement is imperative and failure to achieve is critical risk; why is SSGA coordinating with BNP on Chevron’s lobbying?
  • Can get back to you about details of that particular engagement, context is in getting companies voices out around their commitments
• Chair Hughes – So in support of lobbying in favor of Chevron or in favor of Paris Agreement?
  • Not lobbying for more draconian regulations, commitments on future pathways are already made; concern is how they disclose commitments and how they manage
  • Otherwise clients spend a lot of time figuring out how they report to different governments in different ways
• Chair Hughes – This is not saying that, saying lobbying in accordance with Paris Agreement
  • Nuanced, companies have to manage their pathways, regulation infrastructure is fluid and we’re all trying to come to a framework
• Chair Hughes – So you are not encouraging Chevron or its trade association to lobby in accordance with Paris Agreements?
  • Not encouraging them to lobby on behalf of a specific net zero target ever
  • We do ask them to engage in similar dialogues as today; Chevron has made commitments and SSGA is supporting that
• Chair Hughes – BNP Paribas part owned by the Belgium government?
  • I think of them as a French company
• Chair Hughes – Did you perform analysis to see if their interests were financial or to support a foreign government’s policy?
  • Did not look at that
• Chair Hughes – What is the financial interest for Chevron?
  • Companies have made the commitments independently, sometimes bound where they operate & have a requirement to evidence they are complying; this is if SSGA was involved or not
• Chair Hughes – In 2021, Delta & United recommended against the proposal, SSGA voted in favor; do you know if SSGA agreed to coordinate with BNP Paribas on these votes?
  • Don’t know if there was engagement, ultimately we vote our own analysis
• Chair Hughes – After those votes, CA100 and Ceres issued press releases stating they are major victory; does it sound like they are bragging these votes are taken? Any other way to interpret?
  • No, not SSGA’s statement
• Chair Hughes – But you’re part of CA100?
  • Yes
• Chair Hughes – Quoting from press release, Ceres, CA100, and ICCR helped coordinate, ICCR launched initiative to spur and align lobbying activities with Paris Agreement
• Chair Hughes – Do you know how many climate action proposals SSGA voted for after joining CA100?
  • Don’t have the specific number, but pretty consistent, voted with management around 80% of the time; act of joining CA100 did not really change actions
• Chair Hughes – SSGA supported 8 out of 10 climate action proposal; every climate action proposal was opposed by management
  • Have a different figure, will have to get back to you
• Chair Hughes – Second quarter stewardship activity report from 2021 has material on Phillips 66, vote on scope 3 emission reduction targets, requested companies to expand emissions reductions targets beyond scope 1 and 2
  • Believe we voted against for those reasons
• Chair Hughes – Document says Phillips 66 is well-positioned to encourage others to adopt commitments on greenhouse gasses to be better aligned in peers
  • Yes, all related to disclosure
• Chair Hughes – Says Phillips 66 has not yet adopted greenhouse gas targets; who are the peers that you are trying to bring Phillips 66 in line with?
  • Entire industry, companies around the world, including those in the US
• Chair Hughes – How is it in the best interest of Phillips 66 to bring them in line with peers
  • Companies need to have a plan for how they are navigating the transition, companies that are more thoughtful will be able to manage transition better
  • Ask companies to look at risks involved with the transition and how they will manage
• Chair Hughes – On Pg 5 there is a reference to a proposal which SSGA voted for Phillips 66 to lobby in alignment with Paris Agreement; what analysis did SSGA do?
  • Analyze what peers do, what their investors have the information, transparency of plan, etc.
• Chair Hughes – Are they setting goals you like and are they being transparent?
  • About if they are setting any goals, answer can be they have no plans
• Chair Hughes – And what would be the result?
  • Likely vote against if you don’t have a plan we believe is credible and addresses the transition
• Chair Hughes – How did SSGA determine it was in Phillips 66 best interests for a California state agency to dictate a Texas company’s speech?
  • Different entities take the lead, in this case it was CalPERS
  • Only interest is to make sure companies have thought through transition, are lobbying for coherent disclosures
• Chair Hughes – Requests more information on the CalPERS involvement
• Chair Hughes – Highlights instance of Chevron proposals where SSGA voted against management
  • In 2022, SSGA voted with management, Chevron had shown significant development
• Chair Hughes – On this proposal, SSGA stated it believed time bound stager 3 targets would bring Chevron in line with European peers; energy is worldwide, why would we want to be in line with European peers?
  • Believe it is useful for them to be in line with global peers
• Chair Hughes – Is HSBC a European peer?
  • They would operate financial services globally, so yes
• Chair Hughes – October 13, 2021, engagement, SSGA had call with Chevron, wanted to see a pathway on how to get to a lower carbon economy
  • Correct
• Chair Hughes – Not just about disclosure, is it?
  • No, consistent with SSGA views that companies need to manage the transition
• Chair Hughes – Did SSGA say this to manage terms for Chevron stockholders?
  • Don’t believe ESG dictate long term return, but do believe ESG factors are risks to be managed
  • Companies need to participate and those that understand how their businesses will involve and needed disclosures will be best in class
• Chair Hughes – Notes also say China may need to bring coal into the fold to support growth, so while SSGA is pushing Chevron
  • Recognizing that China is still dependent on very dirty fossil fuels that they will need to transition from
• Chair Hughes – China is putting in a lot more coal than TX
  • Best way to transition away from emissions would be to convert coal plants to LNG plants
• Chair Hughes – SSGA has 3k employees in China, has the Chinese ever attempted to influence any corporate decision making?
  • Not to my knowledge, think the answer is no, but will confirm
• Chair Hughes – Chevron vote was a big deal to a lot of people, CA100 called it a “day of reckoning,” isn’t this partly to ensure companies do what CA100 wants?
  • Unfortunate language choice
• Chair Hughes – Day of reckoning in the best interests of Chevron?
  • SSGA’s focus is on ensuring companies are managing transition
• Chair Hughes – Day of reckoning portion was quoted from CalPERS employee
  • There are certain jurisdictions that will have expectations of companies, this is what we’re trying to encourage companies to understand and deal with, ensure they understand the implications and manage that
• Chair Hughes – On ExxonMobil 2021 proxy contest, SSGA interest in vote?
  • SSGA wanted to ensure directors had appropriate experience and skills
• Chair Hughes – Directed by CA100?
  • Was part of our own engagement with ExxonMobil
• Chair Hughes – CA100 has taken credit, says it was coordinated through them and CalPERS; ExxonMobil opposed and said it had already analyzed lower thresholds
  • Wanted to have a standard in line with he assessment at the time and wanted to have common reporting and disclosure across all companies
• Chair Hughes – Second proposal SSGA opposed over opposition of ExxonMobil management, support of climate lobbying; ExxonMobil said proposal will limit trade association participation
  • About disclosure, wanted to know how they are lobbying, who they are lobbying, etc.?
• Chair Hughes – What is an R Factor Score?
  • Developed our own ESG score internally, looked at several industry leading scores and consolidate them to allow investors to have a compendium
• Chair Hughes – On May 22, 2020, ExxonMobil had an R Factor Score of 65, even better on November 2020, yet SSGA voted against two directors on climate proposals
  • Outperforming on R Factor, but they were not as a stock and company
• Chair Hughes – Did their R Factor go up or down after the vote?
  • Believe they are pretty consistently outperforming peers
• Chair Hughes – They had a score of 63 recently, do you intend to vote against the directors you put on?
  • No, still a good score
• Chair Hughes – Do you like the trend of 66 to 63?
  • Can have short term anomalies, looking at long term trends
• Chair Hughes – Proposal for a racial integrity audit at Chevron, about disparate climate impact on people of color, Chevron opposed and claimed studies were not based on good science, but SSGA voted for?
  • Yes
• Chair Hughes – Did SSGA determine it was in the client’s best interest?
  • Thought it was appropriate for them to conduct the audit, respecting that they had a different view
• Chair Hughes – What analysis did SSGA take?
  • Looked at trends surrounding peers
• Chair Hughes – Are racial equity audits always good for companies?
  • Tricky one, certainly believe in combating racial inequities and have taken our own actions; in the interest of all people to know they have a level playing field
• Chair Hughes – In 2021, when stakeholders proposed racial equity audit of SSGA; SSGA had no directors of color, paid $5m in back pay to settle case on payment to female and black employees
  • Can’t talk about the settlement under US DOL agreement, but example of why it is important for companies to understand their risks in that regard
• Chair Hughes – Your group responded to this, State Street Corp’s board recommended voting against the audit?
  • Board did vote against that
• Chair Hughes – Voted for the racial equity audit of Chevron, but against audit of Start Street Corp?
  • SSGA stewardship does not vote on matters of State Street Corp
• Chair Hughes – On BlackRock, would it be fair to say BlackRock uses voting power in support of Paris Agreement?
  • Blass, BlackRock – No, use votes entrusted as fiduciary to drive long term performance
• Chair Hughes – BlackRock joined CA100 because it believes transition to net zero world is important for the world?
  • Don’t know the context around this
• Chair Hughes – BlackRock invests in O&G utilities, does BlackRock encourage utility to phase out coal plants?
  • Recognize that globally companies are moving to net zero, so look at how companies are managing risks
• Chair Hughes – Are you pledging that BlackRock has not pledged to the net zero goals of CA100?
  • Would point to BlackRock letter asserting that BlackRock is bound as a fiduciary to clients
• Chair Hughes – So BlackRock will not support CA100’s net zero benchmark?
  • We are independent, we look to understand risks on a case by case basis
• Chair Hughes – So it sounds like BlackRock will not support CA100 net zero policy?
  • BlackRock believes transition to low carbon economy is beneficial to client’s portfolios, believe there are climate risks to manage
  • Hear the frustration with language and how it can be interpreted, would just like to keep in mind the performance of BlackRock in Texas and voting choice policy; BlackRock is very transparent
  • Answer to the issue is more voting choice, asset owners being able to take back their vote and determine how assets are invested, can address many of the concerns from the committee
• Chair Hughes – Has anyone at BlackRock encouraged a company to take a position on state policy?
  • Not aware of that
• Chair Hughes – Would like this in writing, want to know if anyone in your company has suggested, encouraged, etc.
  • Happy to take that back, will talk to the senior executives in the company to get you the answer
• Chair Hughes – Anyone at SSGA suggested, encouraged, etc. companies to take positions on state policy?
  • Heinell, SSGA – Can take that and come back, ask that it be a formal request in writing
  • There were 3 proposals related to reproductive rights and voted against because we believed they were overly restrictive and that companies should manage these issues on their own behalf

 

Public Testimony

Hernan Hernandez, Self

• BlackRock and SSGA are top shareholders of AEP, community belief is that AEP has been influenced by these two to shut down local coal plant in support of the ESG agenda

 

Richard Anderson, former Harrison County Judge

• Bottom line for ERS and TRS is the performance of the portfolios, should look at return on investments from the performance over a 10 year period
• Likely will not be mention of ESG in future materials, particularly with Texas investment
• Projections that EVs will be widespread by 2030 are overly optimistic, in a transitional phase that needs to be methodical
• Two years ago Saudi Arabia planned to sell oil, now want to diversify economy; recognizing the transition of the economy and we need to as well