BlackRock CEO seeks firm’s removal from Texas prohibited asset manager list

Economy and Society is Ballotpedia’s weekly review of the developments in corporate activism; corporate political engagement; and the environmental, social, and corporate governance (ESG) trends and events that characterize the growing intersection between business and politics.

Around the world

Chinese stock exchanges release ESG disclosure guidelines

The three major stock exchanges in mainland China have released their first guidelines for ESG-related disclosures. The guidelines will be mandatory for larger companies in two years, while small and medium-sized companies will be encouraged to report data voluntarily:

China’s three major stock markets, the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), and Beijing Stock Exchange (BSE), announced the publication of new sustainability reporting guidelines for listed companies, including a new requirement for hundreds of larger cap and dual-listed issuers to begin mandatory disclosure on a broad range of ESG topics in 2026. …

According to the new guidelines released by the Chinese exchanges, reporting requirements for companies will encompass four “core content” topics, including governance, strategy, impact, risk and opportunity management, and indicators and goals. The listed topics indicate that the exchanges are adopting a “double materiality” approach to sustainability reporting, which includes reporting both on the risks and impact of sustainability issues on an enterprise, as well as on the enterprises’ impacts on environment and society. …

The guidelines outline reporting requirements across a broad range of environmental, social and governance categories, including climate change, ecosystem and biodiversity protection, circular economy, energy use, supply chain security, and rural revitalization, as well as anti-corruption and anti-bribery, among others. Notably, the rules include reporting on Scope 3 value chain greenhouse gas emissions, which has been a key point of controversy for the SEC as it prepares its final climate rule, as companies have raised concerns about the unreliability of, and difficulty in collecting, value chain emissions data.

Italy joins Germany in abstaining from EU vote on ESG liability rule

We reported last week that Germany was set to abstain from a vote on a rule that would create civil liabilities for companies that have ESG violations in their supply chains. The vote was originally scheduled for February 9 but was postponed after Italy indicated it might abstain as well:

Tensions within Germany’s ruling coalition are holding up a deal on the European Union’s toughest ESG rule to date, marking the latest disruption to the bloc’s ability to do business due to infighting in the government of its largest economy. …

Italy signaled it would join Germany in abstaining from a vote, according to one of the people familiar with the process. That means a qualified majority without two of the bloc’s biggest members would be almost impossible. Other smaller EU states, including Finland and Sweden, were doubtful as to whether they’d approve the rules.

The episode is an embarrassing one for Germany after a series of last-minute disagreements in Chancellor Olaf Scholz’s three-party coalition. The lack of unity has hampered the passage of EU laws spanning the phase-out of the combustion engine to financial aid for Ukraine.

EU passes new rules for ESG raters

Even as the EU postponed the scheduled vote on ESG liability, regulators did manage to pass new rules governing ESG rating services:

EU states and the European Parliament reached a deal late on Monday on the bloc’s first ever set of rules to regulate ESG ratings of company sustainability credentials, which guide trillions of investment dollars globally. The bloc is introducing more rigour into environmental, social and governance (ESG) investing as regulators suspect ‘greenwashing’, or companies over-inflating their sustainability profile.

Under the incoming rules, hitherto unregulated ESG ratings providers in the European Union will have to be authorised and supervised by the European Securities and Markets Authority. Raters based outside the bloc will need to have their ratings endorsed by a rater regulated in the EU.

Raters will have to explicitly disclose if their ratings cover how a company’s operations affect the environment or social factors such as human rights, and not just the impact of ESG on a company’s bottom line.

In the states

BlackRock CEO seeks firm’s removal from Texas prohibited asset manager list

Reuters reported on February 6 that BlackRock CEO Larry Fink has petitioned Texas elected officials to remove the firm from the state’s prohibited asset manager list:

BlackRock Chief Executive Larry Fink sought to build rapport with Republican officials at an energy investment summit in Houston on Tuesday after Texas blacklisted the asset manager over moves to transition away from fossil fuels. …

State Lieutenant Governor Dan Patrick said last month that Fink reached out to him after the state blacklisted BlackRock, and that the two had met twice, with the latest meeting yielding the idea to hold the summit.

According to a script of prepared remarks, Fink told the summit on Tuesday that BlackRock could help Texas get $10 billion in private investment to strengthen its power grid, after bouts of extreme weather over the last few years, from heat waves to winter storms, left millions without electricity and heat.

In the spotlight

Buckeye Institute argues ESG hurts farmers and consumers

The Buckeye Institute—a Columbus, Ohio-based think tank—published a report last week arguing that ESG hurts farmers and agriculture and drives up the prices of food and other consumer goods. The more than 40-page report was shared with Fox News:

The report — published Wednesday by the free market think tank Buckeye Institute — is titled “Net-Zero Climate-Control Policies Will Fail the Farm” and outlines how farmers will see their operational costs rise by an estimated 34% as a result of net-zero ESG policies. While the report states its findings were “predictable and unsurprising,” it added that U.S. policymakers seem “unwilling to address or even acknowledge them.” …

“Europe has tested many of these policies aggressively for years, and the results have been an unmitigated failure,” [the authors wrote.] “Despite these resounding warnings from European counterparts, U.S. policymakers have recommitted American industry to the same net-zero emissions standards and have imposed the same kinds of costly mandates on farms and businesses that will ultimately reduce food and energy supplies without achieving their intended benefits.” …

Overall, the prices of common grocery items, including American cheese, would increase 78%, beef would increase by 70%, rice would tick up 56%, chicken would see a 39% increase and eggs would be 36% more expensive. Foods that require more carbon-intensive processes to produce saw the largest uptick in prices.