US Republicans seek review of BlackRock utility holdings

By Ross Kerber

May 10 (Reuters) - A group of 17 Republican U.S. state attorneys general on Wednesday asked federal energy regulators to review BlackRock Inc's ownership of utilities, citing the top fund manager's involvement in industry efforts to limit climate change.

The motion before the Federal Energy Regulatory Commission (FERC) was filed just days after rival Vanguard Group overcame a related challenge from some of the same politicians.

The efforts are part of a Republican campaign against the growing use of environmental, social and governance (ESG) considerations by investors and company executives.

In their motion on Wednesday the attorneys general asked the four-member body known as FERC to audit whether BlackRock has complied with a 2022 order that gave it permission to own more than 10% of U.S. utility company shares.

That waiver from antitrust limits was given because BlackRock functioned as a passive investor. But BlackRock has undercut that by joining groups like the Net Zero Asset Managers initiative seeking to influence utility company operations, the group claimed.

"Maybe BlackRock was a passive investor ten years ago, but today it’s an environmental activist," states the motion led by officials including Indiana Attorney General Todd Rokita.

BlackRock and FERC representatives did not immediately comment. BlackRock, which runs some $9.1 trillion, has said it acts independently and that better ESG data from companies will help investors judge risks on matters like climate change.

Tyson Slocum, a director for the liberal advocacy group Public Citizen who like the Republicans has questioned the growing clout of top fund managers, said that FERC, currently divided between two Democratic members and two Republicans, was unlikely to act on Wednesday's motion.

Slocum also said the Republicans' complaints were off-base, noting BlackRock's continued holdings of big stakes of fossil-fuel companies despite calls to divest them. The Republicans, Slocum said, were "hijacking a legitimate discussion about the outsized roles of managed funds with this anti-ESG nonsense." (Reporting by Ross Kerber Editing by Mark Potter)