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Wednesday, Apr 24, 2024

Florida pulls $2 bln from BlackRock in largest anti-ESG divestment

Florida pulls $2 bln from BlackRock in largest anti-ESG divestment

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.
Dec 1 (Reuters) - Florida's chief financial officer said on Thursday his department would pull $2 billion worth of its assets managed by BlackRock Inc (BLK.N), the biggest such divestment by a state opposed to the asset manager's environmental, social and corporate governance (ESG) policies.

The move will hardly dent BlackRock's $8 trillion in assets and drew a strong response from the company, which said the action put politics over investor interests.

Nonetheless it underscores how a backlash against ESG investing is gathering steam among Republican leaders in Florida, and elsewhere, who criticize corporations for focusing on matters like climate change or workforce diversity.

Republicans are set to assume control of the U.S. House of Representatives in January. This will allow them to hold hearings on ESG and grill company executives about their 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.

Asked about the move, BlackRock said in a statement: "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. Fiduciaries should always value performance over politics."

Neither Patronis nor his office had raised any performance concerns, BlackRock said, adding it has invested more than $65 billion in Florida-based companies, municipal bonds and other securities.

While BlackRock has encouraged portfolio companies to take steps like disclosing more data about their carbon emissions or adding 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 does not press ESG concerns enough. read more

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. read more

Other companies also face Republican scrutiny.

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 (UPS.N) and FedEx Corp (FDX.N) to clarify their policies on tracking firearms shipments.
Comments

Frank Werner 1 year ago
Hell Ya
I Like it!!!!
Need more of this going on!!
ESG is a Scam!
Oh ya 1 year ago
Get woke go broke

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