Tennessee AG probes asset managers over climate change policies

Alliancebernstein Holding LP

05/06/2023 12:00

By Ross Kerber
       June 5(Reuters) - Tennessee's top legal officer has
demanded ten major asset managers provide information over how
they seek to tackle climate change, as part of an investigation
into potential breaches of consumer law. 
    The state's Republican attorney general Jonathan Skrmetti
sent his requests on May 19 in letters to firms that include
AllianceBernstein,  AB.N  Invesco Ltd  IVZ.N  and the Jennison
Associates arm of Prudential Financial Inc  PRU.N , according to
copies provided to Reuters in response to a public records
request.
    While similar investigations by Republican officials have
not led to charges, the letters mark an escalation in attacks on
so-called environmental, social and governance (ESG) investing
practices. 
    Skrmetti and 20 other Republican state attorneys general
wrote to asset managers in March suggesting they are breaching
their fiduciary duties in their handling of environmental or
social issues.
        Some of the other signers of that letter have also sent
asset managers separate information demands about climate
polices, such as an April 24 letter from Louisiana Attorney
General Jeff Landry to Franklin Templeton.
    Shareholder activists and others who support the
consideration of ESG factors say the campaign will not likely
find wrongdoing or diminish investors' concern for issues like
climate change or full workforce inclusion. 
        But some argue that it could have a chilling effect on
ESG conversations, and say the state actions may have already
made companies less willing to talk about such issues.
    "You have seen companies and asset managers being less
visible about their sustainability profile," said Bryan
McGannon, managing director for sustainable investment group US
SIF.
        Skrmetti's letters state he is investigating potential
"unfair or deceptive acts or practices" that would arise from
breaches of Tennessee's 1977 consumer protection law. They did
not provide more details on what these breaches would involve.
    In statement, Skrmetti's office said he is "highly concerned
with corporate collusion," but did not detail specific potential
violations.
    Representatives for Invesco and Jennison declined to
comment. AllianceBerstein did not respond to requests for
comment. Representatives for Franklin Resources  BEN.N , which
operates as Franklin Templeton, did not immediately comment on
Friday.
    Skrmetti's letters ask the asset managers to produce all 
documents, including notes and memos, related to their work with
climate coalitions aiming to help reduce greenhouse gases, such
as Climate Action 100+ or the Net Zero Asset Managers
initiative.
    The letters also ask for information on how asset managers
exercise their rights as shareholders to pressure banks or
energy producers to cut carbon emissions. 
    K&L Gates attorney Lance Dial, whose firm's clients include 
asset managers that received letters from Skrmetti or similar
ones from other state attorneys general, said the probes were 
unlikely to uncover collusion.
    Participation in the industry climate groups, Dial said, "is
taken in furtherance of their fiduciary duty, and they maintain
their independence."
    

 (Reporting by Ross Kerber in Boston; Editing by Aurora Ellis)
 ((ross.kerber@thomsonreuters.com; (617) 412 0093;))