Florida divesting $2 billion from BlackRock over firm's ESG push

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BlackRock defends ESG position

SEC commissioner Hester Peirce discusses the idea of ‘woke’ investing and how BlackRock is pushing back on the GOP, on ‘Fox Business Tonight.’

Florida is divesting from investment giant BlackRock, becoming the latest state to pull assets from the firm over its environment, social, and governance (ESG) policies.

The Sunshine State's chief financial officer, Jimmy Patronis, announced Thursday that the Florida Treasury would immediately begin removing roughly $2 billion in assets from BlackRock's control in a process that should be completed by year's end.

Florida Chief Financial Officer Jimmy Patronis speaks before introducing Florida Gov. Ron DeSantis during a rally for Florida Republicans at the Cheyenne Saloon on November 7, 2022, in Orlando, Florida.  (Photo by Octavio Jones/Getty Images / Getty Images)

"Using Florida’s cash to fund BlackRock’s social-engineering project isn’t something we signed up for," Patronis tweeted in making the announcement. "It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do."

"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," Patronis said in a separate statement. "I think it’s undemocratic of major asset managers to use their power to influence societal outcomes."

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The Florida CFO went on to blast BlackRock CEO Larry Fink, saying, "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."

BlackRock CEO Larry Fink speaks during the New York Times DealBook Summit in the Appel Room at the Jazz At Lincoln Center on November 30, 2022, in New York City.  (Photo by Michael M. Santiago/Getty Images / Getty Images)

BlackRock pushed back against the move in a statement, saying the company was "surprised by the Florida CFO's decision given the strong returns BlackRock has delivered to Florida taxpayers over the last five years."

In an email to FOX Business, the company said neither Patronis nor anyone from his office had raised any performance concerns and called the move political.

"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," the BlackRock statement added. "Fiduciaries should always value performance over politics."

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BlackRock and other major financial institutions, like State Street and Vanguard, have spearheaded an effort to promote ESG standards over the last several years. The ESG movement broadly seeks to promote a green energy transition and left-wing social priorities through the financial sector.

Republican states and groups like the State Financial Officers Foundation (SFOF), though, have waged a war against the ESG movement, arguing that it is anti-democratic and harmful to taxpayers by pushing investments that don't result in maximum earnings for consumers.

BlackRock offices in New York City. The company and nine others were named by Texas Comptroller Glenn Hegar as being hostile to the state’s fossil fuel sector.  (Erik McGregor/LightRocket via Getty Images / Getty Images)

TickerSecurityLastChangeChange %
BLKBLACKROCK INC.722.18+6.18+0.86%

Florida is the latest GOP-led state to divest from BlackRock, following Missouri and Louisiana, who both announced significant reallocations away from the firm in October.

But BlackRock has also faced threats from the left for not being more aggressive in its ESG standards.

New York City's comptroller blasted the firm in September, accusing it of not doing enough to fight climate change and issuing a veiled threat that the city would be "reassessing our business relationships with all of our asset managers, including BlackRock, through the lens of our climate responsibilities."

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Still, the divestments away from BlackRock so far have likely not made much of a financial impact on the investment firm, which is the largest in the world with roughly $8 trillion in assets under management.

FOX Business' Thomas Catenacci and Reuters contributed to this report.

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