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Politicians Want to Keep Money Out of E.S.G. Funds. Could It Backfire?

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Politicians Want to Keep Money Out of E.S.G. Funds. Could It Backfire?

The struggle between pink states and BlackRock, the world’s largest asset supervisor, has been a gawker’s delight.

Republicans don’t usually line as much as punch the chief government of a large Wall Avenue agency in public. In locations like Louisiana and North Carolina, nevertheless, that’s precisely what’s been taking place to Laurence D. Fink, the longtime chief of BlackRock.

The struggle is over BlackRock’s stance on E.S.G. investing. BlackRock believes {that a} give attention to an organization’s environmental, social and governance challenges is the very definition of prudence — and that how traders deal with these challenges will more and more have an effect on income, too. State officers are calling out what they are saying is overly “woke” habits by the asset supervisor.

The large problem right here is the variations of opinion about what constitutes an asset supervisor’s fiduciary obligation. And an fascinating break up has emerged among the many pink states that hate BlackRock’s public stances. Louisiana, citing its fiduciary obligation, has taken cash away from BlackRock. North Carolina, citing its fiduciary obligation, has not.

Mr. Fink has challenged firms to contemplate E.S.G. elements and known as out authorities officers.

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“Stakeholders are pushing firms to wade into delicate social and political points — particularly as they see governments failing to take action successfully,” he wrote in his annual letter to chief executives in 2019.

Final 12 months, he bolstered his message. “Stakeholder capitalism is just not about politics,” Mr. Fink wrote in his 2022 letter. “It isn’t ‘woke.’ It’s capitalism.” On the identical time, he tried to dampen the criticism by noting that BlackRock didn’t divest from fossil gasoline investments as a matter of coverage. Some purchasers do, and others don’t, he added.

Nonetheless, a few of his clients are mad. Final 12 months, John M. Schroder, the Louisiana treasurer, introduced plans to promote $794 million of investments managed by BlackRock. That’s a teeny tiny share of the $8.6 trillion the corporate was managing as of the tip of final 12 months. Nonetheless, it generated headlines and will result in others like Mr. Schroder doing the identical factor.

“In accordance with my authorized counsel, environmental, social and governance investing is opposite to Louisiana regulation on fiduciary duties, which requires a sole give attention to monetary returns for the beneficiaries of state funds,” Mr. Schroder wrote in a letter to Mr. Fink.

However then, Mr. Schroder made a curious remark. “This divestment is important to guard Louisiana from actions and insurance policies that will actively search to hamstring our fossil gasoline sector,” he wrote. “Merely put, we can’t be get together to the crippling of our personal economic system.”

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Mr. Schroder is just not speaking about taxpayers’ or residents’ finest pursuits there, when it comes to the state getting the bottom price investments or the perfect returns on the cash. As a substitute, he’s specializing in the state’s finest financial pursuits.

I had hoped to speak to him or his basic counsel about how he balances the state’s short-term pursuits with the likelihood that utilizing E.S.G. ideas may ship higher returns over time. However it didn’t occur.

“Sorry, however the treasurer is just not taken with offering a response,” a spokeswoman, Pamela Matassa, stated in an e mail. She didn’t reply after I requested why he was uninterested.

Cynthia Hanawalt, a senior fellow on the Sabin Heart for Local weather Change Legislation at Columbia College, took a better take a look at Louisiana at my request. In that state, she stated, native officers are primarily asserting that if they permit their funding managers to make use of E.S.G. analytical instruments, it’s going to result in a discount in the usage of fossil fuels and state revenues.

“Setting apart the query of whether or not or not that’s true, it does appear clear that their focus is just not on optimizing returns,” she stated.

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The treasurer in North Carolina, Dale R. Folwell, has additionally taken an curiosity within the query of what he owes to his constituency. A spokeswoman, Maria Sebekow, wrote to me final month heralding a “bombshell” letter that Mr. Folwell had written calling on Mr. Fink to resign. “This isn’t mere posturing,” Ms. Sebekow’s pitch added.

However it did characterize a form of hedge. On one hand, Mr. Folwell didn’t mince his phrases throughout our interview. He quipped that E.S.G. ought to stand for vitality independence, protected streets and neighborhoods, and good governance.

However, the treasurer fairly pointedly didn’t hearth Mr. Fink from overseeing a few of the state’s cash, whilst he known as on BlackRock’s chief to stroll the plank. And that’s as a result of he didn’t wish to violate his obligation to behave in the perfect pursuits of the North Carolina residents to whom he solutions.

“My fiduciary obligation to those who educate, defend and serve, in addition to to our retirees, directs that the present North Carolina Retirement Programs investments in BlackRock stay at the moment,” he stated in an announcement. “Our job is to search out the perfect worth with the bottom price and highest margin of security.”

“Pulling cash away from BlackRock and giving it to somebody who will cost us 4 occasions as a lot is just not the appropriate factor for our members,” he stated in an interview.

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The truth that states maintain invoking their fiduciary obligation in several methods begs one other query. Let’s say that BlackRock’s E.S.G. investments radically outperform no matter it’s that states transfer their cash into once they divest from BlackRock. May that underperformance create a gap for a breach-of-fiduciary-duty lawsuit in a state like Louisiana, which has publicly declared that it’s apprehensive concerning the regional economic system and never simply traders?

Perhaps. It could actually be fascinating to observe the courtroom slugfest. However there are excessive hurdles to clear for any enterprising lawyer seeking to carry such a swimsuit on behalf of a citizen or pensioner.

One large problem can be the assorted types of immunity that usually defend state governments and the individuals who work for them.

Petitioners would additionally need to face down judges in pink states. Jonathan Berry, a companion on the Washington regulation agency Boyden Grey who oversaw E.S.G. steerage and different regulatory issues on the Division of Labor through the Trump administration, imagined a state of affairs the place he can be squaring off with California’s pension managers in that deep Blue state.

“I’d not anticipate to achieve success going up towards Calpers in a California state court docket, actually for something,” he stated. Attorneys making the case for E.S.G. in conservative states would face equally lengthy odds.

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In the event that they tried, nevertheless, they’d must take advantage of, properly, conservative potential case for this manner of investing. Today, E.S.G. means 1,500 issues to any 1,000 given funding professionals. Cynicism abounds as funding firms relabel present funds with obscure sustainability markers after which increase the charges they cost.

However a minimum of some consensus is rising round a definition of E.S.G. that doesn’t invoke a picture of individuals chaining themselves to timber. “At its coronary heart, E.S.G. investing is de facto about taking a look at all materials dangers,” stated Sonal Mahida, a marketing consultant on the subject who as soon as labored for the oil big Hess.

And if there’s an opportunity that an asset supervisor’s funding is susceptible to dangers that fall beneath the E.S.G. label, that asset supervisor is meant to sit down up and take discover, in accordance with Ms. Hanawalt of Columbia. So it’s odd that state officers who oversee asset managers appear to wish to limit these managers from utilizing info that may assist them do their jobs.

“There’s a cognitive dissonance between political narratives and other people’s sensible obligations,” she stated. “If there’s motive to consider that firms are susceptible to local weather danger or the influence of another E.S.G. issue, fiduciaries are obligated to contemplate these elements.”

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L.A. 2028 Olympic committee parts ways with Salesforce, one of its top sponsors

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L.A. 2028 Olympic committee parts ways with Salesforce, one of its top sponsors

There are four years remaining until the 2028 Summer Olympics in Los Angeles — lots of time to prepare for the international sports event — but local organizers appeared to take a step backward this week.

The privately-run LA28 committee announced in a brief statement that it has “decided to amicably part ways” with one of its biggest sponsors in Salesforce, a customer relationship software company.

It was unclear where the breakup leaves organizers in their stated quest to attract $2.5 billion in sponsorships. They had previously achieved about $1 billion of that total and had been optimistic about reaching several new deals this month.

Though one such partnership was announced on Tuesday, LA28 declined to say how much it will receive for signing with Guild, which helps companies provide career and education assistance to employees.

LA28 now has only two founding sponsors — Comcast and Delta Air Lines — and much work to do in covering the estimated $6.9-billion cost of the 2028 Olympics.

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The effort will involve additional revenue streams, including ticket sales, merchandising and billions of dollars from the International Olympic Committee. Taking into account some of that money, LA28 says it has secured 65% of the overall funding needed.

But if organizers fall short, local and state legislators have agreed to make up the difference with taxpayer dollars.

This week, it was reported that the budget for the upcoming 2024 Paris Olympics has grown to nearly $10 billion, with French taxpayers expected to foot about $3.25 billion of that bill.

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Column: Antiabortion agitators are trying to cripple a lifesaving federal healthcare law

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Column: Antiabortion agitators are trying to cripple a lifesaving federal healthcare law

Here’s how the legal departments of two hospitals, legislators in two states and even the Supreme Court turned a pregnancy emergency for Mylissa Farmer into a life-threatening nightmare.

Farmer, 41, was 18 weeks into her pregnancy when her water broke prematurely. Her doctor instructed her to go to her local hospital in Joplin, Mo.

There, the hospital’s labor and delivery doctors determined that she had no amniotic fluid left. Her baby had “‘zero’ chance of survival” and she risked infection, blood loss and even death. The doctors advised her that they could help her undergo an “inevitable miscarriage,” or she could wait, at risk to her life.

Obstetricians in Idaho live in constant fear…. Idaho’s doctors have been warned that they are being tracked and scrutinized and they should fear prosecution for providing an abortion under any circumstances — even when medically necessary.

— Idaho Coalition for Safe Healthcare

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She chose the former, and then the hospital’s legal department stepped in. Although Missouri’s antiabortion law has exceptions when continuing a pregnancy might cause the mother’s death or “irreversible physical impairment,” the lawyers determined she was not quite there yet.

The doctors advised Farmer to go out of state, but the only hospital capable of handling her condition was in Kansas, which was then in the thick of a political campaign over a proposed antiabortion constitutional amendment.

She arrived at University of Kansas Hospital on Aug. 2, 2022, the very day the vote was taking place. There the doctors offered either to induce labor or end her pregnancy surgically. Then that hospital’s lawyers stepped in. They forbade the doctors to provide any treatment at all, having ruled, according to a doctor, that it “was too risky in this political environment.” Three days later, she reached a clinic in Illinois that performed the necessary treatment.

Mylissa Farmer’s experience matches those of countless other women whose healthcare has been compromised by antiabortion state laws since 2022, when the Supreme Court in its so-called Dobbs decision overturned the guarantee of abortion rights established by Roe vs. Wade in 1973.

But there’s more to her case. The refusal by two major hospitals to treat her emergency condition violated federal law — the Emergency Medical Treatment and Labor Act of 1986, known as EMTALA.

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The law, which was drafted to stop hospitals from “dumping” emergency patients without insurance by denying them treatment, requires all hospitals receiving Medicare funds — pretty much all hospitals — to provide all emergency room patients with the treatment required to “stabilize” their conditions before transferring them or sending them home.

Investigations by Medicare inspectors last year concluded that the Joplin hospital and University of Kansas Hospital violated EMTALA when they released Farmer without providing the requisite treatment. The penalties run up to $50,000 per incident and the termination of the hospitals’ Medicare contracts, but no actions have been announced.

There’s no exception in EMTALA when the required emergency treatment is an abortion. And that has made EMTALA the newest target of antiabortion agitators and politicians. They claim that the Biden administration is using the federal law to promote or even mandate abortions in all cases, which is false.

The claim, however, has caught the eye of the Supreme Court, which has scheduled oral arguments April 24 in a case involving Idaho’s antiabortion law and its manifest conflict with EMTALA.

The court’s decision to take up the case alarmed abortion rights advocates when it was announced on Jan. 5. It looms even larger now: The court has signaled, though not guaranteed, that it will reject a right-wing challenge to the Food and Drug Administration’s approval of mifepristone, the key drug in medication abortions, but the Idaho case could give its conservative majority another crack at strengthening state antiabortion policies nationwide.

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“There was a lot of press around the mifepristone lawsuit,” says Michelle Banker of the National Women’s Law Center, which is providing Farmer with legal representation. “This is a bit of a sleeper case.”

The case is rooted in an advisory issued by Medicare authorities two weeks after the Dobbs decision overturned Roe vs. Wade. It emphasized to doctors and hospitals that when a pregnant woman arrived at an emergency room with a condition that required an emergency abortion, “the physician must provide that treatment.”

When a state law prohibited abortion and didn’t include an exemption when the life of the mother was threatened, the advisory said, “that state law is preempted ” by the federal law. (Boldfaced emphases in the original.)

Antiabortion advocates instantly took up arms against the advisory. They scurried to federal court in Lubbock, Texas, which has a single active judge, Trump appointee James Wesley Hendrix, who obligingly blocked it with a permanent injunction. The government’s appeal went to the notoriously right-wing U.S. 5th Circuit Court of Appeals, which upheld the injunction.

The Texas case hasn’t made it yet to the Supreme Court. It was outrun by the Idaho case, in which the federal government moved to block Idaho’s antiabortion law to the extent it conflicted with EMTALA.

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The conflict, as the government points out, is that the law requires doctors to perform an emergency abortion if necessary to prevent a patient’s condition from deteriorating or to protect her from potentially severe or permanent injury. Idaho law forbids an abortion unless it’s necessary to avert a patient’s death. Doctors caught in this vise are in effect being told that they must allow a pregnant woman’s condition to deteriorate until she is near death before they can act.

It wasn’t entirely surprising that Idaho would become the battleground for the issue. The state is doing very well in the race to enact the most goonishly malevolent antiabortion policies. Its abortion law criminalizes abortion at all stages of pregnancy, with narrow exceptions for cases in which continuing a pregnancy would threaten the mother’s life.

Idaho law also makes it a felony to help a minor leave the state for an abortion. (A federal judge has temporarily blocked the so-called abortion trafficking law while a lawsuit challenging its constitutionality proceeds.)

The state has claimed that its abortion law makes it a felony for a healthcare provider to refer a patient for an abortion out of state. (Also blocked, for now, by a federal judge.) Another state law exposes professors at Idaho public universities with jail terms of up to 14 years for teaching, discussing, or writing about abortion.

Put all that together, and a ruling that it can flout federal law to protect its antiabortion credentials would be right up Idaho’s alley.

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In making its case, Idaho asserts that after the Dobbs decision the Biden administration “reinterpreted” EMTALA “to create a nationwide abortion mandate” — a mandate the administration only “discovered” nearly 40 years after EMTALA’s enactment.

As the government points out, however, the mandate was always within EMTALA; it never had to be spelled out because the right to abortion became the law of the land via Roe vs. Wade 13 years before EMTALA was enacted. Until Dobbs, the role of abortion as an emergency treatment almost never came under question.

Antiabortionists maintain that Dobbs “caused a sea change in the law,” as 5th Circuit appellate judge Kurt D. Englehardt, another Trump appointee, wrote for the three-judge appeals panel upholding the Texas injunction.

That was a cute bit of legerdemain. EMTALA didn’t change as a result of Dobbs — it was healthcare laws in red states that changed to outlaw abortion. “It has always been the case that EMTALA has been understood to require abortion care when that’s necessary to stabilize a patient’s medical condition,” Banker told me. “The only thing that’s new is that Roe vs. Wade has been overturned.”

Indeed, according to a friend-of-the-court brief filed by six former Medicare administrators and former Health and Human Services Secretary Donna Shalala, who served under both President Bush as well as Presidents Clinton and Obama, Medicare repeatedly issued public guidance stressing that abortion should be considered appropriate emergency treatment when warranted, even before Dobbs.

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Idaho, like its apologists in the right-wing fever swamp, maintains that EMTALA “merely prohibits emergency rooms from turning away indigent patients with serious medical conditions” and doesn’t mandate “any specific type of medical treatment, let alone abortion.”

This is a crabbed and mendacious interpretation of the law. It’s a cynical attempt to conflate the problem that prompted Congress to act — hospitals were turning away emergency patients without insurance, a process known as “dumping” — with the much broader law Congress enacted.

EMTALA explicitly protects “any individual” who presents at an emergency room, regardless of their financial or insurance situation. Hospitals aren’t even allowed to inquire about the patient’s financial or insurance status if that would delay examination or treatment.

Idaho’s interpretation suggests that hospitals could simply keep indigent patients in their corridors, untreated, until they wasted away, without violating EMTALA. That’s not what the law says. It explicitly mandates that hospitals “provide either … such treatment as may be required to stabilize the medical condition” or transfer the patient to another facility that can provide the treatment — as long as the transfer itself won’t harm the patient.

What does “stabilize” mean? The law defines the term as meaning that “no material deterioration of the condition” would result from discharging or transferring the patient. It also defines an “emergency medical condition” as one that, without treatment, would jeopardize “the health of the individual,” or cause “serious impairment to bodily functions” or to any organ or body part.

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Far from ignoring pregnancy issues, EMTALA has always explicitly covered women presenting with a pregnancy emergency. In those cases, the law says, the hospitals are bound to provide treatment that protects “the health of the woman or her unborn child.”

The friend-of-the-court briefs piling up on the Supreme Court’s EMTALA docket include several outlining the horrific moral and legal trap facing doctors caught between EMTALA and antiabortion state laws.

“Obstetricians in Idaho live in constant fear,” states a brief filed by a coalition representing 678 Idaho doctors and other medical professionals. “Always at the back of their minds is the worry that a pregnant patient will arrive at their hospital needing emergency care that they will not be able to provide.”

Under Idaho law, doctors face prison terms of up to five years and the loss of their medical licenses for following medical protocols unless “the patient is face-to-face with death.” The federal and state laws are totally irreconcilable: Doctors confronted with an emergency pregnancy, the brief says, have the choice of complying with EMTALA and thus risking a stiff prison term and the end of their careers, or complying with state law and thus risking their patient’s health or even causing her death.

What’s worse, “the culture of fear surrounding Idaho’s abortion laws has only exacerbated the struggle,” the brief says. “Idaho’s doctors have been warned that they are being tracked and scrutinized and they should fear prosecution for providing an abortion under any circumstances — even when medically necessary.”

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Is there any mystery why OB/GYNS are leaving Idaho by the score? Half of the state’s 44 counties have no practicing obstetricians at all.

A solution, albeit a modest one, to the confusion over the responsibilities of obstetricians in antiabortion states would be for the Supreme Court to clarify that federal law prevails when it runs up against a more restrictive state law. Making that clear in Idaho would send a signal to Texas, Missouri and other states that a mother’s life and health can’t be legislated away.

The EMTALA case gives the Supreme Court an opportunity to uphold science and morality on women’s reproductive healthcare, as it appears to be preparing to do on mifepristone. But what if it follows that case by allowing states to sentence pregnant women to substandard emergency care?

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Tesla to slash more than 10% of its global workforce

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Tesla to slash more than 10% of its global workforce

Tesla Inc. is laying off more than 10% of its workforce, Chief Executive Elon Musk wrote in an email to staff.

Musk cited job overlap and the need to reduce costs, according to the email sent late Sunday. Bloomberg News estimated that the layoffs would affect more than 14,000 employees.

“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Musk wrote in the email viewed by The Times.

“As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” he continued. “There is nothing I hate more, but it must be done.”

The reduction comes as the Austin, Texas-based carmaker and its rivals contend with less demand for electric vehicles in a crowded field.

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“It’s an ominous sign of some dark days ahead,” said Dan Ives, managing director at Wedbush Securities. “Streamlining is one thing, but the size of this cut is a concern for a company that’s still in growth mode.”

Although Tesla moved its headquarters from California to Texas in 2021, it still operates a massive factory in Fremont that is one of the largest manufacturing sites in the state.

In January, Tesla reported disappointing fourth-quarter earnings that included its first year-over-year decline in quarterly deliveries in four years. Revenue and earnings per share also missed estimates.

Industry sales have slowed amid higher interest rates that have made the costly cars more expensive and have increased the challenges of expanding the market beyond the affluent first adopters who made Tesla one of the most highly valued companies in the world.

Earlier this year, Manhattan Beach-based Fisker Inc. announced it was cutting 15% of its 1,200-person workforce, halting production for six weeks and working on a deal for $150 million in new financing, dependent on forging a strategic relationship with a major auto manufacturer.

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However, it was unable to obtain the financing after talks ended with the manufacturer.

Lucid Motors, a Newark, Calif.-based maker of luxury sport utility vehicles and sedans, got a $1-billion cash infusion in March from its biggest backer, an affiliate of Saudi Arabia’s Public Investment Fund. In February, Apple announced it was ending development of a self-driving electric vehicle after reportedly spending more than $10 billion on the project over a decade.

On Monday morning, Drew Baglino, Tesla’s senior vice president of powertrain and energy, announced on X, formerly Twitter, that he was leaving the company.

“I made the difficult decision to move on from Tesla after 18 years yesterday,” he wrote. “I will always have a warm spot for the people of Tesla and Tesla products in my heart and wish the team and company the best in the future.”

In a reply, Musk wrote: “Thanks for everything you’ve done for Tesla. Few have contributed as much as you.”

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Tesla’s stock Monday closed at $161.48, down nearly 6%. The company is scheduled to report first-quarter earnings April 23.

“Investors need answers from Musk on next week’s call because it’s been a string of bad news,” Ives said. “I consider it a fork-in-the-road period for Tesla and Musk. It was a Cinderella story for years, but now it’s turned into a scene out of the ‘Thriller’ video.”

Times staff writers Russ Mitchell and Laurence Darmiento contributed to this report.

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