Kulturkampf in the world of finance: Republicans against “woken” capitalism

In the US, the Kulturkampf has reached the financial world: Conservative states are withdrawing hundreds of millions of dollars from big financial firms like BlackRock for allegedly boycotting fossil fuels.

Kentucky is horses, bourbon – and energy. Almost 40,000 people work in the energy sector here. Fossil fuels like coal are important, for the economy and for identity. Those who boycott fossil fuels can’t do business with Kentucky because Kentucky is an energy state, Allison Ball, the Treasury Secretary, who is a Republican, told Fox News recently.

Kentucky has just blacklisted eleven banks and financial service providers for allegedly boycotting energy companies. Among them are BlackRock, Citigroup and JP Morgan. The consequences could be pretty serious, Ball says.

ESG standards are a red rag for Republicans

Two things could happen: Kentucky could sell shares in these companies and no longer include them in its pension funds — and second, Ball threatens, “We as a government would not do any more contracts with them in the future.”

Kentucky is just one of about 20 conservative states currently pressuring investment firms to stop behaving like left-wing do-gooders. The Republicans call this behavior “woke”. ESG standards in particular are a red rag for Republicans. ESG stands for “environmental, social, and governance” and describes corporate management that acts according to ecological and social criteria.

Company boss Larry Fink takes a clear position

Companies need to consider more than just earnings, explains David Primo, a professor of political science at the University of Rochester. They would have to think about the broader impact of their actions on society.

And that’s where the ESG elements come into play. So far, he says, corporations have been pushed “by the left” to do more in this regard. Now the pressure is coming from the right to focus exclusively on making money.

Larry Fink in particular has become the bogeyman. The head of BlackRock, the world’s largest wealth manager, is calling for companies to take more responsibility and think long-term. Unfortunately, the long term is not relevant today, Fink accused his opponents from a podium last year: “To put it bluntly: Populism is not about the long term, it’s about the moment!”

Topic could pick up speed in the election campaign

In fact, Republicans have recognized that fighting do-gooders and leftist indoctrination resonates with their grassroots, whether it’s critical history lessons, transgender issues, or politically correct capitalism.

And a leader of these populist policies, as is so often the case, is Ron DeSantis, the Florida governor who is siphoning $2 billion from BlackRock. The fact that BlackRock does not boycott fossil fuels at all, but continues to invest there, does not seem to be important.

At the moment, this is primarily symbolic, says politics professor Primo. The companies are certainly not enthusiastic, but certainly none of them will go bankrupt either.

However, Vanguard, another large investment firm, has now withdrawn from a climate initiative. The Republicans see this as a great victory. The topic will certainly continue to gain momentum before the presidential elections next year.