Woke investing has faced a clampdown on Wall Street, but if its critics are to be believed State Street – one of the biggest asset managers in the US – is still using it to curry favor with leftist state and local officials who control hundreds of billions of dollars in pension money, The Post has learned.
State Street’s work involving controversial Diversity Equity and Inclusion and green energy policies — where it facilitates woke shareholder votes on behalf of some of its big, public pension clients — has sparked chatter on Wall Street and Washington following New York City Comptroller Brad Lander’s move last month to block rival BlackRock as a manager of the city’s pension fund.
In a recent posting on X, Alabama GOP senator Tommy Tuberville said State Street, which manages $8 billion in city pension money overseen by Lander, is “already caving to the WOKE Mamdani climate agenda before he has even taken office.” Lander is a key supporter of the socialist New York City mayor elect Zohran Mandani, who himself supports policies such as DEI and green energy.
For its part, State Street says it’s getting a bad rap — and it has some strong evidence suggesting as much. The bank offers nearly a dozen such proxy-voting frameworks for pension funds, including those that appeal to Red State public officials that steer clear of anything woke.
It doesn’t engage directly with US companies to push stuff like Diversity Equity and Inclusion employment policies or green energy. Rather it facilitates shareholder votes on these measures for progressive pension-fund clients, people like Lander — the fiduciary of the city retirement funds — during what’s known as “proxy season,” when big investors get to vote on corporate governance proposals.
Yet the controversy is real. Lander isn’t looking to ditch BlackRock – headed by investing prodigy Larry Fink – because it has done a bad job managing the retirement funds of the city’s firemen, teachers and police. Rather, Lander’s beef is that BlackRock has gone non-woke in recent years.
After fully embracing corporate government policies like Environment Social Governance investing, the big asset manager no longer demands strict adherence to so-called carbon-neutral edicts, meaning it won’t force ExxonMobil to invest in windmills versus drilling. It also won’t demand strict gender and racial preferences in appointing board members.
State Street, meanwhile, offers something known as the “Sustainability Stewardship Service Proxy Voting and Engagement Policy.” The policy, reviewed by The Post, dictates how the firm will push proxy or shareholder votes on shares it holds for its woke clients on a range of corporate governance edicts, including those, critics say, that are on dubious legal grounds.
Those include “progress made against deforestation- and other land use-related targets and commitments” and whether portfolio companies “regularly identify whether there are risks related to human rights in their operations and value chain.”
Most controversial, critics say, are the firm’s “Diversity” standards, which hold that “Effective board oversight of a company’s long-term business strategy necessitates gender diversity, and the level of such diversity depends on various factors including culture and progress made.” The standards also require board-level “racial/ethnic diversity in select markets.”
State Street’s moves appear to run counter to the recent corporate shift away from DEI. Most large companies, even such diversity stalwarts as JPMorgan and BlackRock, have sought to roll back strict adherence to DEI in hiring and in business dealings – including asset management.
Trump later doubled down on ending DEI, issuing an executive order that “directs all departments and agencies to take strong action to end private sector DEI discrimination, including civil compliance investigations.”
Press officials from State Street say there is nothing improper about how it handles DEI and other progressive shareholder votes because it’s doing so at the behest of their clients, like Lander, when they demand it. It also facilitates votes for conservative public officials who run pension assets in Middle America and the south.
“The sustainability policy that you’re referencing is a policy that our clients can choose or not choose … our voting and engagement policies and practices comply with US law,” wrote spokesman Mark LaVoie. He declined to comment on Tuberville’s social-media commentary.
Officials at rival banks suggest otherwise. “What they’re essentially doing is laying such mandates on clients that they are enforcing on their portfolio companies,” said a senior executive at a major money management firm.
State Street said it recently revamped its policies on such matters to alert clients it won’t discuss with US portfolio companies such hot-button issues as DEI and sustainability.
One reason is that it is also a federal government contractor, one of the primary targets of Trump’s executive orders ending DEI on both the federal level and in the private sector. It manages a 25% chunk of the so-called “Thrift Savings Plan,” a $1 billion retirement fund for federal government employees.
A White House spokesman had no comment on State Street’s DEI activities.
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