Florida pulls $2 billion from BlackRock in biggest anti-ESG sale

Dec 1 (Reuters) – Florida’s finance director said on Thursday his department would divest $2 billion of its assets managed by BlackRock Inc ( BLK.N ), the largest divestment by a state opposed to the asset manager’s environmental, social and corporate policies. governance policy (ESG).

The move is unlikely to drain BlackRock’s $8 trillion in assets and drew a strong response from the company, which said the move put politics above investor interests.

Nonetheless, it underscores how a backlash against ESG investing is gathering steam among Republican leaders in Florida and elsewhere, who criticize companies for focusing on issues like climate change or workforce diversity.

Republicans will take control of the US House of Representatives in January. This will allow them to hold hearings on ESG and grill company managers about their policies, and also pressure regulators to scrutinize them.

In a statement, Florida Chief Financial Officer Jimmy Patronis said the state treasury, which he oversees, will remove BlackRock as manager of about $600 million of short-term investments and have the custodian freeze $1.43 billion of long-term securities now with BlackRock, with an eye. to redistribute the money to other money managers by the start of 2023.

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

“Florida’s finance division is divesting BlackRock because they have openly stated that they have goals other than producing returns,” Patronis said in the statement from his office.

Asked about the move, BlackRock said in a statement: “We are disturbed by the new trend of policy initiatives like this that sacrifice access to high-quality investments and thereby jeopardize returns, which will ultimately harm Florida’s citizens. Managers should always value performance over policy.”

Neither Patronis nor his office had raised any concerns about its performance, BlackRock said, adding that it has invested more than $65 billion in Florida-based companies, municipal bonds and other securities.

While BlackRock has urged portfolio companies to take steps such as disclosing more data on their carbon emissions or adding more diverse board members, it has said its efforts are aimed at improving company performance and has resisted calls such as divestment from oil companies.

US Democratic officials have argued that BlackRock is not pushing ESG concerns enough. read more

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

Other companies also face Republican scrutiny.

Earlier this week, Republican attorneys general from various states asked a federal regulator to limit Vanguard Group Inc’s activities over ESG concerns and asked United Parcel Service Inc ( UPS.N ) and FedEx Corp ( FDX.N ) to clarify their policies for tracking firearm shipments.

Reporting by Ross Kerber; Editing by Chizu Nomiyama

Our standards: Thomson Reuters Trust Principles.

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