Florida will divest $2 billion of assets managed by BlackRock by the end of the year, according to a statement released Thursday by state Chief Financial Officer Jimmy Patronis, citing the investment manager’s integration of ESG considerations in its investment process.
Calling BlackRock’s support for ESG a “social engineering project,” Patronis said that “it’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do.”
“I need partners within the financial services industry who are as committed to the bottom line as we are – and I don’t trust BlackRock’s ability to deliver.”
In a statement from BlackRock provided to ESG Today, however, the investment manager said that it was “surprised by the Florida CFO’s decision given the strong returns BlackRock has delivered to Florida taxpayers over the last five years,” and adding that “neither the CFO nor his staff have raised any performance concerns.”
“As a fiduciary, everything we do is with the sole goal of driving returns for our clients.”
The announcement marks the latest move in an ongoing anti-ESG push by Republican politicians in the U.S., including a resolution passed by Florida Governor Ron DeSantis to no longer allow ESG considerations to be used by fund managers for the state’s $228 billion of pension funds.
BlackRock, as the largest global investment management company, and a leading voice in the investment community on climate change and energy transition-related investment themes, has found itself at the center of many of these efforts, with Louisiana recently announcing a planned divestment from BlackRock funds of nearly $800 million in order to “protect” the state’s Treasury funds “from ESG,” and Missouri pulling $500 million in pension assets from BlackRock due to the firm’s “woke political agenda.”
In August, 19 Attorneys General signed a letter accusing BlackRock of acting with “mixed motives” in its pursuit of an anti-fossil fuel and pro-net zero agenda for following a “social purpose” not aligned with a focus on financial returns.
In September, BlackRock responded to these claims, with a letter by Head of External Affairs Dalia Blass, hitting back at “misconceptions” raised about the firm, as well as what it called “several inaccurate statements” in the letter relating to the investor’s motivations for participating in ESG initiatives. The letter stressed that BlackRock’s climate focus is fully aligned with its fiduciary duty “to identify short- and long-term trends in the global economy that may affect our clients’ investments,” and that its engagement efforts are focused on asking companies for improved disclosure, and not on dictating emissions targets or lobbying activities.
In today’s statement, BlackRock hit back at Florida’s recent anti-ESG moves, which it said will ultimately hurt the state’s citizens, adding that the firm is “disturbed by the emerging trend of political initiatives like this that sacrifice access to high-quality investments and thereby jeopardize returns.”
The state’s assets included in the divestment include $1.43 billion of Florida’s Long Duration Portfolio, which includes corporate obligations, asset backed securities, and municipal bonds, and the State Treasury’s $600 million Short Term Investment Fund which was managed exclusively by BlackRock.