The state of Louisiana ended its 12-year relationship with its investment advisory firm. Its founder publicly expressed concern with Treasurer John Schroder's recent decision to pull nearly $800 million in statement investments from an asset management company because he disagrees with its environmental, social and governance principles. (Greg LaRose/Louisiana Illuminator)
The Louisiana Bond Commission has ended its 12-year relationship with a financial advisory group whose founder publicly aired his disagreement with the state treasurer’s investment moves. The decision was made Thursday to give the state’s municipal adviser contract to a competing firm.
Lamont Financial Services, a New Jersey firm, was among the five companies seeking the deal. The bond commission, which Treasurer John Schroder chairs, interviewed the applicants in a public hearing Monday.
Schroder asked all five for their take on his recent decision to pull almost $800 million in state investments from the asset management company BlackRock Inc. He explained that his decision was driven by BlackRock’s call for companies to embrace so-called environmental, social and governance (ESG) principles. That philosophy conflicts with the Louisiana economy’s strong reliance on the fossil fuel industry, Schroder said, adding that BlackRock’s continued control of state dollars and abdication of its fiduciary responsibility could violate state law.
The municipal advisor’s role involves bond financing and does not involve investment decision.
Lamont’s founder Bob Lamb was the only applicant for the adviser contract to question Schroder’s move during Monday’s interviews. He told the treasurer that excluding ESG-based investments and avoiding credit rating agencies with the same philosophy could eventually cost the state money.
Schroder said Monday he welcomed disagreement from the state’s municipal adviser. It was also noted that Renee Boicourt, Lamont’s longtime point person for Louisiana, planned to retire soon.
Lamb did not immediately respond to a request for comment.
The advisory contract, which is fee-based, was awarded to Public Resources Advisory Group (PRAG), a New York firm that holds similar deals in 18 other states. Its senior managing director, Wendell Gaertner, called ESG principles a new concept that is “trying to put a corporate box into government” finance. Representatives with PRAG told the bond commission Monday providing investors with clear data, such as Louisiana’s emphasis on coastal restoration, could go a long way toward achieving their ESG objectives.
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