Florida Pulls $2 Billion From BlackRock in Largest Anti-ESG Divestment
By Ross Kerber
(Reuters)—Florida's Chief Financial Officer said on Thursday his department would pull $2 billion worth of its assets managed by BlackRock Inc, the biggest such divestment by a state opposed to the asset manager's environmental, social, and corporate governance (ESG) policies.
While the move will hardly dent BlackRock's $8 trillion in assets, it underscores how the backlash among many Republican politicians, such as those in Florida, against ESG investing, which they see as promoting a "woke agenda," is gathering steam.
Republicans are set to assume control of the House of Representatives in January. This will allow them to hold hearings on ESG and grill the chief executives of BlackRock and other major assets managers about their ESG policies, and also pressure regulators to scrutinize them.
In a statement, Florida CFO Jimmy Patronis said the state's Treasury, which he oversees, would remove BlackRock as manager of about $600 million of short-term investments and have its custodian freeze $1.43 billion of long-term securities now with BlackRock, with an eye on reallocating the money to other money managers by the start of 2023.
Patronis accused BlackRock of focusing on ESG rather than higher returns for investors.
"Florida's Treasury Division is divesting from BlackRock because they have openly stated they've got other goals than producing returns," Patronis said in the statement provided by his office.
A BlackRock representative did not immediately comment.
While BlackRock has encouraged portfolio companies to take steps like disclosing more data about their carbon emissions or to add more diverse board members, it has said its efforts are aimed at improving company performance and resisted calls for steps like divesting from oil companies. U.S. Democratic officials have argued BlackRock doesn't press ESG concerns enough.
So far, only Republican-controlled states have made major reallocations away from BlackRock, including $794 million pulled by Louisiana's treasurer and $500 million by Missouri's treasurer, both in October.
Earlier this week, Republican attorneys general from various states asked a federal regulator to limit Vanguard Group Inc's activities over ESG concerns, and asked United Parcel Service Inc and FedEx Corp to clarify their policies on tracking firearms shipments.
(Reporting by Ross Kerber in New York; Editing by Chizu Nomiyama)
Florida Pulls $2 Billion from BlackRock in Largest Anti-ESG Divestment
Florida Chief Financial Officer Jimmy Patronis announced on Thursday that the state would start to pull $2 billion in assets away from BlackRock due to the state’s opposition to the company’s major push into Environmental, Social, and Governance (ESG) policies.
The CFO’s $2 billion divestment is the most significant anti-ESG divestment to date, as Republican states have started to take a stand against this type of leftist activism in financial investing.
Patronis explained in a press release that the state’s treasury would “immediately have Florida’s custody bank freeze approximately $1.43 billion worth of long-term securities and remove them as the manager of approximately $600 million worth of short-term overnight investments.”
The billions of dollars in funds are invested through asset managers as part of Florida’s Treasury Investment Pool, according to the press release. However, Patronis noted that the state would be completely divested y from BlackRock’s management and relocated to other fund management entities by the beginning of 2023.
Patronis said in a statement that, as Florida’s chief financial officer, it is his responsibility to get the best return possible for his state’s taxpayers, noting that the “more effective we are in investing dollars to generate a return, the more effective we’ll be in funding priorities like schools, hospitals and roads.”
Acknowledging that the major banking institutions and economists are predicting there will be a recession while the Federal Reserve increases interest rates to combat the inflation crisis, Patronis added, “I need partners within the financial services industry who are as committed to the bottom line as we are – and I don’t trust BlackRock’s ability to deliver.”
Patronis further explained:
BlackRock CEO Larry Fink is on a campaign to change the world. In an open letter to CEOs, he’s championed ‘stakeholder capitalism’ and believes that ‘capitalism has the power to shape society.’ To meet this end, the asset management company has leaned heavily into Environmental, Social, and Governance standards – known as ESG – to help police who should, and who should not gain access to capital.
Whether stakeholder capitalism, or ESG standards, are being pushed by BlackRock for ideological reasons, or to develop social credit ratings, the effect is to avoid dealing with the messiness of democracy. I think it’s undemocratic of major asset managers to use their power to influence societal outcomes. If Larry, or his friends on Wall Street, want to change the world – run for office. Start a non-profit. Donate to the causes you care about.
Using our cash, however, to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for. It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do. Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns. As Larry Fink stated to CEOs ‘[A]ccess to capital is not a right. It is a privilege.’ As Florida’s CFO I agree wholeheartedly, so we’ll be taking Larry up on his offer. There’s no lack of companies who will invest on our behalf, so the Florida Treasury will be taking its business elsewhere.
As the Sunshine State’s CFO touched on in his statement, ESG policies are a form of leftist activism in financial investing that has become the latest vector to influence the way Wall Street financial firms and corporations continue to take social and political positions that do not relate to their business, such as stances associated with climate change, as well as the Diversity, Equity, and Inclusion (DEI) agenda. Wall Street firms, such as BlackRock and others, sell ESG as a way to invest according to specific criteria that the political left pushes on voters and consumers.
Notably, the state’s $2 billion may not significantly impact the asset manager, as BlackRock has $8 trillion in assets. However, it still drew significant criticism from the company, claiming the move was politically motivated.
“We are disturbed by the emerging trend of political initiatives like this that sacrifice access to high-quality investments and thereby jeopardize returns, which will ultimately hurt Florida’s citizens,” BlackRock said in a statement. “Fiduciaries should always value performance over politics.”
In addition to Florida, state treasurers from Republican-controlled states like Louisiana and Missouri reallocated hundreds of millions of dollars away from BlackRock in October.
Jacob Bliss is a reporter for Breitbart News. Write to him at jbliss@breitbart.com or follow him on Twitter @JacobMBliss.
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