Florida in $2bn ‘anti-ESG’ divestment from BlackRock
The Republican state’s CFO accused the asset manager of running a ‘social-engineering project’.
Florida’s chief financial officer has announced that the state’s treasury department will begin divesting $2bn worth of assets currently managed by BlackRock.
Jimmy Patronis criticised BlackRock’s approach to environmental, social and governance (ESG) issues and suggested that Florida was divesting from the asset manager because “they have openly stated they’ve got other goals than producing returns”.
The move is thought to be the largest divestment by a Republican state based on “anti-ESG” sentiment, and brought a forceful response from BlackRock.
Patronis claimed that BlackRock CEO Larry Fink was on a “campaign to change the world” by championing ESG and stakeholder capitalism. Florida’s CFO accused the company of running a “social-engineering project” and said the Republican state wanted to play no part in this.
“Whether stakeholder capitalism, or ESG standards, are being pushed by BlackRock for ideological reasons or to develop social credit ratings, the effect is to avoid dealing with the messiness of democracy,” he said.
“If Larry, or his friends on Wall Street, want to change the world – run for office. Start a non-profit. Donate to the causes you care about.”
Patronis said that Florida’s custody bank would immediately freeze $1.43bn worth of long-term securities and remove BlackRock as the manager of $600m worth of short-term overnight investments. Florida will aim to have divested fully from BlackRock by the start of 2023.
In response, BlackRock issued a strongly-worded statement pointing out that neither Patronis nor his staff had raised any performance concerns and that strong returns had been delivered over the past five years. It added that BlackRock had invested more than $65bn into Florida’s economy on behalf of its clients.
BlackRock stated: “We are disturbed by the emerging trend of political initiatives like this that sacrifice access to high-quality investments and thereby jeopardise returns, which will ultimately hurt Florida’s citizens. Fiduciaries should always value performance over politics.”
Florida’s divestment from BlackRock is the latest in a series of anti-ESG developments in Republican states in the US. It is likely to become even more divisive issue from January when the Republicans take control of the House of Representatives.