A series of Republican states announced they were withdrawing their investments in the world’s largest asset manager, BlackRock, over concerns about the company’s decision to adopt environmental, social and environmental investment strategies. governance (ESG).
In an interview with the Financial Times, South Carolina state treasurer Curtis Loftis said he would withdraw $200 million from BlackRock by the end of the year.
Meanwhile, Louisiana Treasurer John Schroder told the company last week that the state would withdraw $794 million in investments from the company, citing its promotion of “demonstrably anti-fossil fuel policies” that ” destroy Louisiana’s economy.”
“As a result, the Louisiana Treasury will liquidate all of BlackRock’s investments by the end of 2022. To date, we have disposed of $560 million. We are making a strategic divestment over a period of time so that state money is not lost to our citizens,” Schroder wrote (pdf), Oct. 5, to Laurence Fink, CEO of BlackRock.
“When complete, this divestiture will reflect $794 million that will no longer be entangled in BlackRock’s money market funds, mutual funds, or exchange-traded funds (ETFs).”
Utah Treasurer Marlo Oaks announced in September that he had liquidated $100 million in BlackRock funds and transferred those funds to different asset managers, while Arkansas State Treasurer Dennis Milligan reportedly withdrew $125 million in March.
New York-based BlackRock, which manages $10 trillion in assets, is one of the most powerful entities in the world.
The company also has significant stakes in a significant number of companies in the United States and around the world, including Apple, Microsoft and Amazon, and, given its huge holdings, therefore wields great influence in determining policy. of these companies.
However, the asset manager has come under increasing criticism from Republican lawmakers who have accused it of placing its political agenda above client interests and profits.
In September, 19 Republican-leaning state attorneys general sent a letter (pdf) to BlackRock CEO Larry Fink challenging his company’s “reliance on environmental, social and governance investment criteria over earnings.” shareholders in the management of state pension funds.
ESG investing is a set of standards used by a company in the investment decision-making process to measure sustainable and ethical impacts.
“BlackRock’s past public engagements indicate that it has used citizen assets to pressure companies to comply with international agreements, such as the Paris Agreement, that mandate the phasing out of fossil fuels. , raise energy prices, drive inflation and weaken the national security of the United States,” the attorneys general wrote in their letter.
BlackRock issues rebuttal
Last week, the investment firm published a new page on its official website titled “Energy Investing: Setting the Record Straight”, in which it states that “the energy industry plays a crucial role in the economy and, on behalf of our clients, BlackRock has invested $170 billion in US public energy companies, including pipelines and power generation facilities.
“Despite these investments, BlackRock has recently been accused of ‘boycotting’ oil and gas companies. We are setting the record straight on our focus on energy investing, our responsibilities to our customers and how we view climate risk,” the page reads.
The firm noted that its priority is to “fulfill our commitment to the financial interests of our clients” and that it does not “dictate how clients should invest”, but that it believes that “companies that better manage their exposure to climate risk and capitalizing on opportunities will generate better long-term financial results.
“We have made no commitments or promises to meet environmental standards that limit our ability to invest our clients’ money on their behalf in accordance with their objectives,” the company added.
BlackRock lost $1.7 trillion of its customers’ money in the first half of 2022, which the company attributed to rising inflation, interest rates and general market carnage. The trillion-dollar loss is the largest amount of money ever lost by a single company in a six-month period, according to Bloomberg.