By Ross Kerber
(Reuters) – A group of 15 Republican state attorneys general has questioned whether administrators of BlackRock mutual funds are sufficiently independent of the world’s largest asset manager.
In a letter dated July 6 and provided to Reuters on Friday by a representative of Montana Attorney General Austin Knudsen, the group reviewed longstanding concerns about mutual fund governance in the context of more recent efforts by to limit the growing consideration of environmental, social and governance (ESG) issues by companies and investors.
BlackRock did not immediately comment.
The letter was addressed to ten people listed in a BlackRock filing as nominees for a board that oversees BlackRock closed-end mutual funds.
The AGs sought information on things such as financial relationships which they said “could undermine the independence of directors”.
Among other things, they said that BlackRock fund trustees who are directors of companies in which BlackRock owns more than 5% of the shares could lead to independence issues. They also cite how BlackRock fund directors are accountable for dozens of funds — exceeding BlackRock’s own “overspill” guideline for public company boards.
Critics have raised similar questions in the past about whether well-paid mutual fund directors are in a good position to speak out. The attorneys general apply this concern in the context of positions BlackRock has taken on ESG issues, such as a request for portfolio companies to consider climate change.
“It strains credulity that a mutual fund trustee does not feel obligated to adhere to BlackRock’s ESG program, even when it is not in the financial interest of fund shareholders,” they wrote.
Republican state attorneys general have previously asked how major asset managers vote proxies at company annual meetings and demanded information on how they seek to address climate change.
(Reporting by Ross Kerber; editing by Diane Craft)