The U.S. Securities and Exchange Commission (SEC) introduced new guidance on Feb. 26, requiring major asset managers like BlackRock and Vanguard to shift from 13G to more complex 13D filings when advocating for environmental, social, and governance (ESG) changes.
As the Trump administration and White House advisor Elon Musk call for a rollback in ESG investing, asset managers now have to prepare a more complex 13D filing for such investments, in the name of increasing transparency. Passive investment funds are facing stricter regulations, with reduced influence on corporate policies.
The SEC’s new rule also reclassifies ESG engagement as activist investing, forcing firms to disclose their strategies in greater detail.
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BlackRock, one of the world’s largest asset managers with approximately $11.6 trillion under management, has built its reputation on passive funds and ETFs. In recent years, the firm has scaled back its support for ESG-focused shareholder resolutions, arguing that many are unwarranted.
In a statement to Reuters, BlackRock denied such actions were leveraged or influenced by its shareholder, to exert control over publicly traded companies. The firm also noted that “we are complying with the new requirements including by highlighting our role as a ‘passive’ investor at the start of each engagement.”
BlackRock recently withdrew from the Net Zero Asset Managers group, amid increasing regulatory scrutiny and legal challenges from public officials.
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Trump’s anti-ESG sentiments can be traced back to June 1, 2017, when he announced in the Rose Garden of the White House during his first term that the U.S. would pull out of the Paris Climate Agreement.
The return of Donald Trump as U.S. president has led to increased regional divergence in sustainable finance, with the U.S. adopting a more conservative stance compared to Europe.
His administration has also frozen federal funding for several environmental programs, including grants for climate research under the National Oceanic and Atmospheric Administration (NOAA), renewable energy initiatives within the Department of Energy, and conservation efforts managed by the Environmental Protection Agency (EPA).
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