The Florida government, led by Ron DeSantis, continues its campaign against the imposition of the woke ideology in the state. The Sunshine State cabinet has decided to withdraw its funds from the investment firm BlackRock, valued at more than $2 billion. BlackRock is a leading investment firm which utilizes ESG (environmental, social, governance) policies.
Jimmy Patronis, who is the chief financial officer (CFO) of the state of Florida, released a statement justifying the decision. Foremost, he does not trust the financial institution itself.
As Florida’s Chief Financial Officer, it’s my responsibility to get the best returns possible for taxpayers. The more effective we are in investing dollars to generate a return, the more effective we’ll be in funding priorities like schools, hospitals and roads.
As major banking institutions and economists predict a recession in the coming year, and as the Fed increases interest rates to combat the inflation crisis, 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.
"Antidemocratic"
He also mentioned BlackRock's ideological agenda:
BlackRock CEO Larry Fink is on a campaign to change the world. In an open letter to CEOs, he’s championed “stakeholder capitalism” and believes that “capitalism has the power to shape society.” To meet this end, the asset management company has leaned heavily into Environmental, Social, and Governance standards – known as ESG – to help police who should, and who should not gain access to capital.
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. I think it’s undemocratic of major asset managers to use their power to influence societal outcomes. 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.
ESG
ESG investment involves redirecting funds to projects that meet a set of leftist ideological criteria. The ESG movement has its origins in the banking and insurance sectors, and is supported by the United Nations, the World Economic Forum, and the world's leading governments.
Within the ESG movement, the most prominent company is BlackRock. The investment company, which sparked criticism from the left for its involvement in the Iraq war, is now one of its main allies in the business world.
Many states take a stand against BlackRock
Other Republican states, such as Louisiana, Utah, Texas and Missouri, have also withdrawn their funds from the company. John Schroder, Louisiana secretary of the treasury, told Larry Fink in a letter that.
This divestment is necessary to protect Louisiana from mandates BlackRock has called for that would cripple our critical energy sector. I refuse to spend a penny of Treasury funds with a company that will take food off tables, money out of pockets and jobs away from hardworking Louisianans.
I will not allow our financial partners to undermine my fiduciary responsibility to maximize investment returns while accepting a prudent level of risk for the benefit of our citizens. It is imperative that we stand up to BlackRock and resist the pressure to simply fall into line with their leftist worldview.
Texas Comptroller Glenn Hegar also announced his state's withdrawal of funds:
The environmental, social and corporate governance (ESG) movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy. Our review focused on the boycott of energy companies, rather than a review of the entire ESG movement. This research uncovered a systemic lack of transparency that should concern every American regardless of political persuasion, especially the use of doublespeak by some financial institutions as they engage in anti-oil and gas rhetoric publicly yet present a much different story behind closed doors.
Downgrade of recommendation
All these withdrawals have little impact on BlackRock's enormous portfolio of around $2 trillion. However, that's not to say that BlackRock doesn't have its own problems stemming from its ideological investment policy.
Last October, financial analyst Brennan Hawken of UBS changed his recommendation on BlackRock from "buy" to "neutral," "based on environmental pressure to earnings and risk from the firm’s ESG positioning."
Tightening ties with China
Last year, a report by Consumer's Research recommended that financial managers in 10 states withdraw their pension funds from BlackRock. The reason, however, wasn't related to ESG. It was BlackRock's heavy investments in China:
BlackRock’s unabashed gusto for Chinese markets flies in the face of concerns about China’s ascendant standing in the world, its authoritarian model of government, and its ambitions to supplant the U.S. as the pre-eminent world power. Administrations of both parties have come to understand the great risk posed by the CCP and, breaking from prior policy of promoting China’s peaceful rise, labeled it a strategic rival against which the U.S. must compete. Earlier this month the U.S.-China Economic and Security Review Commission, a body of security and economic experts convened by Congress, issued a report recommending that the United States take more aggressive steps to curtail, not expand, economic ties with China.
Nineteen attorneys general question BlackRock
In August, 19 attorneys general, mostly from Republican states, signed a letter to BlackRock asking the company to re-evaluate its investment criteria. They warned:
Our states will not stand idly by while our pensioners' retirement is sacrificed for BlackRock's climate agenda. It is time for BlackRock to clarify whether it truly values our states' most valuable stakeholders, our current and future retirees, or risk even greater losses than those caused by BlackRock's quixotic climate agenda.
