Following on the wildly distorted, inaccurate attack on ESG in a letter from Republican Attorneys General to Larry Fink at Blackrock (our suggested response is here, Fink’s actual response is here, and the rebuttal from the Democratic Attorneys General is here), we now have a letter from Republican state treasurers that is just as slanted and just as ignorant.

With more bluster than reason, the GOP treasurers demonstrate right from the top that they are more interested in scoring political points with their funders and base than having a serious discussion of how risk and return are evaluated by fiduciaries. Note the use of the term “pledge fealty” rather than “accept the reality of regulatory and liability risk” and the use of “consider risk” instead of “ensure that operations are free of bias,” again potential regulatory and liability risks.

To take just a few examples, some recent shareholder proposals would require oil companies to pledge fealty to the Paris Climate Agreement, social media companies to crack down on “hate speech,” insurance companies to consider race in underwriting insurance policies, and retailers to weigh in on state abortion policy. At best, those kinds of ESG proposals require expensive audits, time-consuming reports, and cumbersome policies with no apparent link to a targeted company’s business. At worst, they require the targeted companies to spend significant management time and corporate resources pursuing goals untethered to shareholder value, or to relinquish parts of their business—including products or services that investors deemed worthy investments of their hard- earned capital in the first place.

We look forward to the response which, unlike this letter, will be substantive, respectful, and solidly based in financial assessment for the sole benefit of the beneficial holders, who, by the way, would be in the best position to determine the value of Blackrock’s approach. Just a reminder to the letter’s signatories — that is how markets work.