BlackRock spent much more on lobbying in the US last year than it did the previous year. This was because the world’s largest asset manager was being criticised for using environmental, social, and governance (ESG) factors when investing. BlackRock said it would spend $2.38 million on lobbying the government in 2022, which is a 63% increase from 2021. Within that, it paid $1.2 million to high-powered lobbying firms, which is more than double what it paid before.
State lobbying registrations show that the company also registered five lobbyists in Texas and two in Florida. In 2020, neither state had any registered lobbyists. In these states, Republican politicians have been leading the charge against investment groups that they think are against fossil fuels. Now that Republicans run the House of Representatives, the ball is expected to be passed to Congress.
Texas has said that BlackRock is against fossil fuels and has set it up to be sold off. Last year, Florida’s treasurer took $2 billion away from BlackRock because of ESG. However, the state’s pension funds still use BlackRock. In a statement, BlackRock said that it “works with US policymakers to make sure investors’ voices are heard when important issues like retirement security, market structure, and protecting investors’ freedom to choose financial products that best fit their individual needs and goals are being discussed.”
Spending on lobbying by money managers tends to go up and down depending on what is being talked about in Washington, with big spikes around bills about taxes, retirement accounts, and how securities are regulated. Last year, Congress changed the rules for employer-sponsored retirement plans and held hearings on securities regulation and index funds. Climate investment also became a bigger topic of discussion.
BlackRock spends less on lobbying than Fidelity and Invesco, which have been among the top asset managers in recent years when it comes to using federal lobbyists. Fidelity said it will spend $2.4 million in 2022, which is up 10%, and Invesco said it will spend $4.92 million, which is up 21%. The Open Secrets website says that, in general, asset managers aren’t as good as the national leaders, like Amazon, Meta, and Pfizer.
State Street, which was criticised along with BlackRock by Texas lawmakers at a hearing on ESG investing in December, also spent a lot more in 2022, going from $1.08 million to $1.76 million. The group, which includes a bank and an asset manager, said that its spending in 2020 was similar to what it would be in 2022 and that the drop was due to the timing of a large payment made once a year. It didn’t say anything else.
Vanguard, a rival index fund company, spent a little less on lobbying the federal government in 2022, dropping 14 percent to $1.82 million. However, it went from having no lobbyists in Texas in 2021 to having two last year. Vanguard was not required to go to the anti-ESG hearing in Texas because it said it was leaving the Net Zero Asset Managers initiative, a major global climate alliance.
“The asset management industry is still working with both parties in Congress to pass laws that put long-term investors’ needs first.” According to the Investment Company Institute, an industry lobby group, recent priorities have included tax policies that encourage saving and investing, the bipartisan retirement bill “Secure 2.0,” and bills that focus on the SEC’s core missions of capital formation, investor protection, and orderly markets. The ICI’s spending on lobbying dropped by 15% in 2022, to $4.58 million. It said this was because of retirements and changes to its contracts with outside companies.
