The Louisiana Bond Commission has ended its 12-year relationship with a financial advisory group whose founder publicly disagreed with the state treasurer’s investment measures. The decision was made on Thursday to award the state councilman’s contract to a competing company.
Lamont Financial Services, a New Jersey firm, was among five companies seeking the deal. The Bonds Committee, chaired by Treasurer John Schroder, questioned the nominees in a public hearing on Monday.
Schroder asked the five for their take on his recent decision to leverage nearly $800 million in state investments of asset management firm BlackRock Inc. He said his decision was prompted by BlackRock’s call for companies to adopt so-called environmental, social and governance (ESG) principles. That philosophy conflicts with Louisiana’s economy’s heavy reliance on the fossil fuel industry, Schroder said, adding that BlackRock’s continued control of state dollars and abdication of fiduciary responsibility may violate state law.
The role of the municipal councilor relates to bond financing and does not involve investment decisions.
Lamont founder Bob Lamb was the only consultant contract candidate to question Schroder’s decision during Monday’s interviews. He told the Treasurer that excluding ESG-based investments and avoiding credit rating agencies with the same philosophy could potentially cost the state money.
Pulling on Louisiana investments could ‘bite our ass,’ says treasurer adviser
Schroder said Monday he welcomes the state councilman’s dissent. It was also noted that Renée Boicourt, Lamont’s longtime point person for Louisiana, planned to retire soon.
Lamb did not immediately respond to a request for comment.
The fee-based consultancy contract was awarded to Public Resources Advisory Group (PRAG), a New York-based company that has similar deals in 18 other states. Its senior managing director, Wendell Gaertner, called ESG principles a new concept that “tries to put a corporate box in public finance”. Representatives from PRAG told the bond commission on Monday that providing investors with clear data, such as Louisiana’s focus on coastal restoration, could go a long way toward meeting their ESG goals.
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