Arizona is moving forward with its plan to divest its pension funds to BlackRock amid concerns over the investment firm’s massive push for environmental, social and governance (ESG) policies that have led other states to take similar action.
Arizona Treasurer Kimberly Yee said in a statement on Thursday that the state treasury’s Investment Risk Management Committee (IRMC) has begun evaluating the relationship between the state pension fund and black rock end of 2021.
“Part of the review by IRMC involved reading the annual letters from CEO Larry Fink, who in recent years has begun to dictate to companies in the United States to follow his personal political beliefs,” Yee wrote. “In short, BlackRock has evolved from a traditional asset manager to a political action committee. Our internal investment team felt this took the company away from its general fiduciary duty as an asset manager. .”
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In response to those findings, Yee noted that Arizona began divesting more than $543 million from BlackRock money market funds in February 2022 and “reduced our direct exposure to BlackRock by 97%” over the course of the year. ‘year. Yee added that Arizona “will continue to reduce our remaining exposure to BlackRock over time in a phased approach that takes into consideration a safe and prudent investment strategy that protects taxpayers.”
Although the state will continue to hold BlackRock stock through shares in a passive index of the 1,500 largest U.S. companies, Arizona will have “minimal direct exposure” to BlackRock of “less than 1 tenth of one percent of our total assets under management”. from the end of November. Yee said Arizona intends to vote its shares in the index in an effort to “change BlackRock’s political activism.”
“We will continue to fight the dangerous path of companies pushing their social issues and awakenings inside the investment space and return to traditional money management that puts people first,” he said. Yee’s statement concluded.
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black rock is currently the largest asset manager in the world with approximately $8 trillion under management and is one of the leading financial institutions that has led the charge for ESG adoption in recent years. The ESG movement globally seeks to promote a green energy transition and left-wing social priorities through the financial sector. Critics of the ESG movement say its focus on green investing runs counter to companies’ fiduciary responsibility to seek the best possible returns for investors.
BlackRock pushed back on criticism of its investment strategy in a statement to Fox Business that read in part: “Over the past year, BlackRock has been the subject of campaigns suggesting that we are either ‘too progressive’ or “too conservative” in the way we run our We are neither. We are a fiduciary. We put the interests of our clients first and provide them with the investment choices and performance they We won’t let these campaigns stop us from meeting our customers’ expectations.
The statement adds: “In the United States alone, clients granted BlackRock $84 billion in long-term net inflows in the third quarter and $275 billion in the past twelve months.
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The ESG policies advanced by BlackRock have drawn the ire of some investors and policymakers.
Florida’s chief financial officer recently announced that the state treasury is taking steps to remove approximately $2 billion in assets of the management of BlackRock before the end of this year. In October, Louisiana and Missouri announced they would reallocate state pension funds to BlackRock, which amounted to approximately $1.3 billion in combined assets. With Arizona’s divestment, approximately $3.8 billion in state pension funds were divested to BlackRock from those four states alone.
Additionally, the North Carolina State Treasurer called for the resignation of BlackRock CEO Larry Fink, and the Texas Legislature subpoenaed BlackRock for financial documents.
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The investment firm has also come under fire from activists who argue that BlackRock is not doing enough to carry out its ESG commitments. New York City Comptroller Brad Lander wrote to Fink in September, citing an “alarming” contradiction between the company’s words and actions. Lander wrote: “BlackRock cannot simultaneously declare that climate risk is a systemic financial risk and assert that BlackRock has no role in mitigating the risks that climate change poses to its investments by supporting decarbonization in the global economy. ‘real economy’.
BlackRock insisted that its “role in the transition is one of fiduciary to our clients” and “to help them manage investment risks and opportunities, not to design a specific decarbonization outcome in the economy. real”.
Fox Business’ Breck Dumas contributed to this story.