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Dec 09, 2022

The week in investor relations: BlackRock’s ESG controversy, Chinese market rebounds and ECB calls for ban on crypto

Our pick of the IR stories from around the web you might have missed this week

– The controversy over investment titan BlackRock’s focus on ESG issues heated up, after Texas state lawmakers subpoenaed the company’s records in a probe into the issue, reported the Daily Mail.

The legislative subpoena, issued last month and reviewed by on Wednesday, commands BlackRock to hand over documents related to its ESG strategy for a December 15 hearing of the Texas Senate’s Committee on State Affairs. It follows mounting criticism of BlackRock from Republican lawmakers and state officials, who accuse the firm of putting social and political goals ahead of earning returns for investors and retirement savers.

– In other news from the Big Three, Vanguard Group walked out of the world’s largest climate-finance alliance, marking the coalition’s biggest defection to date as US Republicans step up their threats against firms deemed hostile toward the fossil-fuel industry.

Bloomberg (paywall) reported that Vanguard’s decision followed a ‘considerable period of review’, according to a company statement earlier this week. Withdrawing from the Net Zero Asset Managers initiative, a sub-unit of the Glasgow Financial Alliance for Net Zero, ‘will help provide the clarity our investors desire’ about everything from the role of index funds to financial risks in the context of climate change, the firm said.

– The SEC issued new guidance that could see publicly traded companies disclose their exposure to crypto assets, reported Cointelegraph. In a statement released on December 8, the SEC’s Division of Corporation Finance said recent upheaval in the crypto asset market has ‘caused widespread disruption’ and noted that companies may have disclosure obligations under federal securities laws to disclose whether these events could have an impact on their business.

The commission also included a sample letter that would be addressed to companies asking for additional disclosures about their exposure to crypto bankruptcies, crypto asset volatility and any other significant crypto market development.

– In other crypto news, Yahoo!Finance reported that European Central Bank (ECB) senior executive Fabio Panetta proposed a ban on cryptocurrencies with an ‘excessive ecological footprint’ and once again likened investing in crypto to gambling. EU officials have previously rejected an outright ban on crypto mining, but recent legislation, called markets in crypto assets, could require firms to report any potential environmental impact.

Panetta opened up with a salvo against the crypto ecosystem in a statement for the Insight Summit at the London Business School. He compared crypto to the betting industry, concluding that ‘many cryptocurrencies are just a new way of gambling’.

– This week marks two years since the Covid-19 vaccination drive began, yet both the US and the world economy continue to be dominated by issues created by the pandemic, noted The Wall Street Journal (paywall) in a report.

It added that the uncertainty is about to get worse, as China starts the joy, pain and eventual catharsis of reopening. Markets have been betting on the short-term benefits of reopening since rumors of the policy change began. The renminbi enjoyed its best five-week gain against the dollar since internationalization in 1994, with domestic stocks jumping about 10 percent.

– Britain set out 30 measures to overhaul the financial sector, including a repeal of ‘burdensome’ EU rules the government says will unlock investment and maintain the City of London as one of the most competitive financial hubs in the world, Reuters reported.

The planned reforms also include a review of rules put in place following the financial crisis over a decade ago to make bankers accountable for their decisions and ease capital requirements for smaller lenders, after much lobbying by banks. UK chancellor Jeremy Hunt will formally set out the plans at a meeting with financial sector officials in Edinburgh.

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