Several states in the US, including Arkansas ($125 million), Florida ($2 billion), Louisiana ($794 million), Missouri ($500 million), South Carolina ($200 million), Utah ($100 million), and West Virginia ($8 billion), have divested a total of approximately $11.7 billion from BlackRock, one of the world’s largest asset management firms, due to concerns over the company’s commitment to environmental, social, and governance (ESG) principles.
These divestments represent a small portion, approximately 0.15%, of the $8 trillion managed by BlackRock, according to data from an analysis by Ben Zeisloft with The Daily Wire.
State officials have expressed concern that the ESG movement may present obstacles to state pension funds and other entities seeking access to capital markets, as ratings agencies have downgraded bond ratings linked to cultural matters unrelated to financial health.
They have also argued that the ESG philosophy mixes political causes with investment decisions, exposing investors to risks, Zeisloft notes.
In particular, some officials have pointed to the underperformance of technology stocks, which rank highly in ESG ratings due to their involvement in social issues, compared to the strong profitability of energy stocks, which rank poorly due to concerns about carbon emissions.
West Virginia State Treasurer Riley Moore, who announced in January that the state would no longer use BlackRock to manage roughly $8 billion in operating funds due to the company’s advocacy of net zero investment strategies, which discourage investments in the fossil fuel industry, said in an interview with The Daily Wire, “It’s almost along the lines of a religious fervor, where they’re willing to take a loss to further their political ideology. They need to be maximizing returns for their beneficiaries.”
In response to the divestments and the ongoing debate over the ESG movement, BlackRock announced last month that it will allow institutional clients to vote their own shares rather than acting as a proxy, giving investors the freedom to opt out of ESG efforts if they choose.
The company previously took “voting action on climate issues” against dozens of portfolio companies, according to a stewardship report published two years ago.
