BlackRock Inc (NYSE:BLK)’s focus on environmental, social and governance (ESG) investments risks the loss of further US$2bn of US public funding by the state of Florida.
Freezing US$1.4bn worth of long-term securities, alongside removing US$600mln in shorter-term investments from the investment giant’s control, Florida’s financial chief, Jimmy Patronis, suggested BlackRock was forfeiting shareholder returns with its passion for ESG matters.
“Using Florida’s cash to fund BlackRock’s social-engineering project isn’t something we signed up for,” he outlined, while also accusing BlackRock of policing who accesses capital.
Using Florida’s cash to fund BlackRock’s social-engineering project isn’t something we signed up for. It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do. We’re divesting from BlackRock. READ MORE HERE: https://t.co/acstXCDjqW
— Jimmy Patronis (@JimmyPatronis) December 1, 2022
Patronis added: “By the beginning of 2023, the State Treasury will have divested from BlackRock’s management of all short and long-term investments and relocated investment responsibilities to other fund management entities.”
Outlining BlackRock was “surprised” by the revelation, spokesperson Ed Sweeney said: “We are disturbed by the emerging trend of political initiatives like this that sacrifice access to high-quality investments.”
He added the move would “ultimately hurt Florida’s citizens.”
Florida State governor Ron DeSantis previously promised to combat “woke ideology,” as he put it, in a campaign that saw him re-elected in November.
In the past, Louisiana and Missouri also announced they would pull US$794mln and US$500mln respectively from funds managed by BlackRock over the firms ESG drive.
BlackRock chief executive Larry Fink defended the company’s investment choices in his 2022 open letter to CEOs, where he argued: “Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ’woke’.
“It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”
However, the firms outward backing of ESGs was contravened when it admitted to the UK government in October that it would continue fossil fuel investments.
Alongside this, its ESG model was accused of being “broken” by one of BlackRock's former fund managers, who suggested little change was actually being enforced.