Environmental, social and governance (ESG) investing is a favored strategy by woke companies focused on making the world “a better place.”
Forbes describes the criteria for the ESG strategy as:
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Environment. What kind of impact does a company have on the environment? This can include a company’s carbon footprint, toxic chemicals involved in its manufacturing processes and sustainability efforts that make up its supply chain.
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Social. How does the company improve its social impact, both within the company and in the broader community? Social factors include everything from LGBTQ+ equality, racial diversity in both the executive suite and staff overall, and inclusion programs and hiring practices. It even looks at how a company advocates for social good in the wider world, beyond its limited sphere of business.
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Governance. How does the company’s board and management drive positive change? Governance includes everything from issues surrounding executive pay to diversity in leadership as well as how well that leadership responds to and interacts with shareholders.
BlackRock, Inc. is an American multinational investment management corporation and the world’s largest asset manager.
The company has embraced ESG and encourages portfolio companies to disclose their ESG data including carbon emissions and board diversity, among other criteria.
BlackRock’s woke strategy seems ironic considering their heavy investments with global polluter and the human rights crushing CCP run China.
Last December,William Hild, Executive Director of Consumers’ Research, sent a letter to the governors of the 10 states with the top 10 state pension funds invested with BlackRock.
Hild writes, “Later today, Consumers’ Research, the nation’s oldest consumer advocacy organization, will issue a Consumer Warning focused on the world’s largest money management firm, BlackRock. The warning is meant to raise awareness among American consumers that BlackRock is taking their money and betting on China. In so doing they are putting American security at risk, along with billions of dollars from U.S. investors, including many state-run pension plans. I wanted to make sure that you were aware that your state is one of the top ten states whose public pension funds are invested in BlackRock and, therefore, potentially at risk based on the issues we outline in our Consumer Warning.”
“For these reasons and more, Consumers’ Research wants to ensure you are aware of the risks associated with investing with BlackRock. We urge elected officials to do their due diligence in educating themselves and their staff on the multiple risks posed by BlackRock’s extensive investments in Chinese companies, both from an ethical standpoint as well as the fiduciary responsibility owed to U.S. pension holders and retirees. As the leader of a state whose pension funds are among the top ten most extensively invested in BlackRock, we invite you to examine our report and conduct any necessary efforts to learn more about the risks to the assets of your state’s public employees.”
In addition to Blackrock’s troubling heavy investments in China, their ESG focus has led the State of Florida to announce that it will pull $2 billion of its assets managed by the firm.
Florida’s Chief Financial Officer said on Thursday his department would pull $2 billion worth of its assets managed by BlackRock Inc (BLK.N), the biggest such divestment by a state opposed to the asset manager’s environmental, social and corporate governance (ESG) policies.
While the move will hardly dent BlackRock’s $8 trillion in assets, it underscores how the backlash among many Republican politicians, such as those in Florida, against ESG investing, which they see as promoting a “woke agenda” is gathering steam.
Republicans are set to assume control of the House of Representatives in January. This will allow them to hold hearings on ESG and grill the chief executives of BlackRock and other major assets managers about their ESG policies, and also pressure regulators to scrutinize them.
In a statement, Florida CFO Jimmy Patronis said the state’s Treasury, which he oversees, would remove BlackRock as manager of about $600 million of short-term investments and have its custodian freeze $1.43 billion of long-term securities now with BlackRock, with an eye on reallocating the money to other money managers by the start of 2023.
In a press release, Patronis said:
TALLAHASSEE, Fla. – Today, Florida Chief Financial Officer (CFO) Jimmy Patronis announced that the Florida Treasury will begin divesting $2 billion worth of assets currently under management by BlackRock. The State Treasury will immediately have Florida’s custody bank freeze approximately $1.43 billion worth of long-term securities and remove them as the manager of approximately $600 million worth of short-term overnight investments. These taxpayer funds are invested by asset managers as part of Florida’s Treasury Investment Pool. 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.
CFO Jimmy Patronis said, “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.
“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.
“Using our cash, however, to fund BlackRock’s social-engineering project isn’t something Florida ever 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. Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns. As Larry Fink stated to CEOs ‘[A]ccess to capital is not a right. It is a privilege.’ As Florida’s CFO I agree wholeheartedly, so we’ll be taking Larry up on his offer. There’s no lack of companies who will invest on our behalf, so the Florida Treasury will be taking its business elsewhere.”
BlackRock managed $1.43 billion of Florida’s Long Duration Portfolio, which manages investments such as corporate obligations, asset backed securities, and municipal bonds. Unlike the externally managed portfolios which are managed by 12 different asset managers, BlackRock exclusively managed Treasury’s $600 million Short Term Investment Fund (STIF), which is a cash sweep vehicle Treasury uses to assist long duration, intermediate duration, and short duration managers in managing their cash on a daily basis. This fund uses any excess cash that a portfolio manager may have at the end of the day and invests that cash into very short, very liquid type securities.
The Florida Department of Financial Services manages approximately $60 billion in taxpayer money.