- Ron O’Hanley said pressure to divest isn’t helping the Earth
- Environmentalists have targeted State Street over fossil fuels
According to Bloomberg article published on May 2, 2023, State Street Corp. Chief Executive Officer Ron O’Hanley said the push for large asset managers to divest from polluting companies will stoke political debates without doing anything to help the Earth.
To curb carbon emissions and transition to cleaner forms of energy, polluting industries need investments so they can start to change, O’Hanley said, speaking at the Milken Institute Global Conference on Monday. State Street, one of the world’s largest asset managers, has been criticized by environmentalists calling for large financial firms to sell their holdings of oil and gas producers.
That pressure will slow down the energy transition, O’Hanley said.
“There’s been enormous pressure put on the financial institutions to actually divest — and to me there is not a dumber thing in the world than to put pressure on an investment manager, or for that matter an asset owner, to divest,” O’Hanley said.
An acrimonious debate is bubbling over between green energy advocates and Republican politicians, who lament “woke” policies and the rise of environmental, social and governance-related investments.
“What gets accomplished out of it? The portfolio gets de-carbonized. Does the air we breathe change? Not at all. This is the problem with having this kind of investment debate,” O’Hanley said. “It’s really not being constructive.”
Environmentalists have targeted State Street, which has $3.6 trillion in assets under management, and its larger competitors Vanguard Group and BlackRock Inc., for their investments in oil and gas companies — many of which come from index-tethered investments. O’Hanley said that calls for divestment are counterproductive.
BlackRock CEO Larry Fink, who has drawn criticism from both sides over the issue, has lamented the politicized nature of ESG debates.
“Let’s be clear, the narrative is ugly, the narrative is creating this huge polarization,” Fink said at Bloomberg’s The Year Ahead event in Davos earlier this year. “If you really read the CEO letters that I’ve written in the past, I talk about a transition.”
