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

Florida pulls $2 billion from BlackRock in largest anti-ESG divestment
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Dec 1 (Reuters) – Florida’s chief financial officer said on Thursday his department will divest $2 billion worth of its assets managed by BlackRock Inc. (BLK.N)The largest such investment by a state opposed to the asset manager’s environmental, social and corporate governance (ESG) policies.

The move would hardly hurt BlackRock’s $8 trillion in assets and drew a strong response from the company, which said the move put politics over investor interests. It nevertheless illustrates how the backlash among many Republican leaders, such as in Florida, against ESG investing, which they see as promoting a “wicked agenda,” is gathering steam.

Republicans are poised to take control of the US House of Representatives in January. it will be Allow them to be heard on ESG And grill BlackRock’s CEO and other key asset managers about their ESG policies, and pressure regulators to scrutinize them.

In a statement, Florida CFO Jimmy Patronis said the state treasury, which he oversees, will remove BlackRock as manager of about $600 million of short-term investments and its custodian of $1.43 billion of long-term securities now deferred to BlackRock. About reallocating money to other money managers by early 2023.

Patronis accused BlackRock of focusing on ESG rather than high returns for investors.

“The Florida Department of the Treasury is diving out of BlackRock because they have publicly stated that they have other goals than generating returns,” Patronis said in a statement from his office.

When asked about the move, BlackRock said in a statement that “We are disturbed by the emerging trend of political initiatives that sacrifice access to high-quality investments and thereby jeopardize returns, which will ultimately harm the citizens of Florida. Fiduciaries always value performance.” Should. Politics.”

Blackrock said neither Patronis nor his office had raised any performance concerns, which invested more than $65 billion in Florida-based companies, municipal bonds and other securities.

While BlackRock has encouraged portfolio companies to take steps such as publishing more data about their carbon emissions or adding more diverse board members, it said its efforts are aimed at improving company performance and resisting calls from oil companies for steps like divesting. US Democratic officials have argued that BlackRock does not push ESG concerns enough. Read more

So far, only Republican-controlled states have made major reallocations from BlackRock, including $794 million pulled by Louisiana’s treasurer. Read more and $500 million by Missouri’s treasurer, both in October.

Other agencies also face Republican scrutiny. Earlier this week, Republican Attorney Generals from various states ask A federal regulator to limit Vanguard Group Inc.’s activities on ESG concerns, and ask United Parcel Service Inc (UPS.N) and FedEx Corporation (FDX.N) To clarify their policy on tracking firearm shipments.

Reporting by Ross Business; Editing by Chizu Nomiyama

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