The state of Florida has removed $2 billion in environmental, social and governance (ESG) divesting in BlackRock, saying social engineering wasn’t something it ever “signed up” for.
QUICK FACTS:
- Florida’s Chief Financial Officer, Jimmy Patronis, said on Thursday his department would be removing $2 billion worth of assets managed by BlackRock Inc., a partner of the World Economic Forum, for a social-engineering project.
- The move marks the largest divestment by a state opposed to the asset manager’s environmental, social and corporate governance (ESG) policies.
- The CFO said BlackRock was focusing on ESG rather than higher returns for investors, and would be removing BlackRock as manager of about $600 million of short-term investments and have its custodian freeze $1.43 billion of long-term securities.
- “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,” BlackRock said in response.
FLORIDA CFO JIMMY PATRONIS ON PULLING FUNDS FROM BLACKROCK:
“Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns,” Patronis said in a statement.
BACKGROUND:
- A number of Republican-controlled states have recently pulled away from BlackRock, with the Louisiana treasurer removing $794 million in funds and Missouri $500 million.
- Early last month, BlackRock CEO Larry Fink announced in a letter that BlackRock would promote a “new era of shareholder democracy” after facing criticism for leveraging votes on behalf of clients to support the company’s own interests, all linked to ESG.
- Fink said in his letter that nearly half of the company’s index equity assets under management are now open for voting choice, including “all the public and private pension plan assets we manage in the United States.”
- “It’s clear there are investors who don’t want to sit on the sidelines; they have a view on corporate governance, and they want a meaningful way to express those views,” the executive wrote.
