(Reuters) – Republican attorneys general from 21 US states wrote to proxy consulting firms Institutional Shareholder Services (ISS) and Glass Lewis on Tuesday, asking whether the companies’ voting recommendations on issues such as climate and boardroom diversity violated their obligations to customers.
“Evidence related to climate change advocacy and targets suggests potential violations of your contractual and legal obligations,” the attorneys for states, including Texas and Utah, said in their letter.
They asked both firms by the end of January to answer questions, such as how they set “appropriate” emissions targets.
Neither ISS nor Glass Lewis responded immediately. Both firms have drawn criticism in the past for the widely followed recommendations they offer investors on how to vote at annual company meetings.
But their recommendations remain popular with investors.
Traditionally, most criticism comes from business leaders.
But, as in Tuesday’s letter, Republicans have stepped up their criticism of companies that integrate environmental, social, or governance (ESG) goals into their business. Republican critics believe the companies should focus more on investment returns.
At the same time, companies and leading asset managers are under pressure from several state Democratic officials to pay more attention to issues such as climate change and workforce diversity, which are also attracting growing interest from investors.
Meanwhile, Republicans have raised concerns about the ESG efforts of BlackRock Inc, the world’s largest asset manager, saying its focus could affect investor returns.
BlackRock Chief Executive Larry Fink said Tuesday his company had lost about $4 billion in assets under management due to a political backlash against ESG investing in the United States.
(Reporting by Aishwarya Nair in Bengaluru; editing by Bradley Perrett)