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Florida pulls $2 billion from BlackRock in largest anti-ESG divestment By Reuters

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© Reuters. FILE PHOTO: The BlackRock brand is pictured exterior their headquarters within the Manhattan borough of New York Metropolis, New York, U.S., Could 25, 2021. REUTERS/Carlo Allegri/File Photograph

By Ross Kerber

(Reuters) – Florida’s Chief Monetary Officer mentioned on Thursday his division would pull $2 billion price of its belongings managed by BlackRock Inc (NYSE:), the largest such divestment by a state against the asset supervisor’s environmental, social and company governance (ESG) insurance policies.

The transfer will hardly dent BlackRock’s $8 trillion in belongings and drew a powerful response from the corporate, which mentioned the motion put politics over investor pursuits. Nonetheless it underscores how a backlash amongst many Republican leaders, reminiscent of these in Florida, in opposition to ESG investing, which they see as selling a “woke agenda” is gathering steam.

Republicans are set to imagine management of the U.S. Home of Representatives in January. This can permit them to carry hearings on ESG and grill the chief executives of BlackRock and different main belongings managers about their ESG insurance policies, and in addition strain regulators to scrutinize them.

In an announcement, Florida CFO Jimmy Patronis mentioned the state’s Treasury, which he oversees, would take away BlackRock as supervisor of about $600 million of short-term investments and have its custodian freeze $1.43 billion of long-term securities now with BlackRock, with a watch on reallocating the cash to different cash managers by the beginning of 2023.

Patronis accused BlackRock of specializing in ESG moderately than greater returns for buyers.

“Florida’s Treasury Division is divesting from BlackRock as a result of they’ve overtly said they have different objectives than producing returns,” Patronis mentioned within the assertion offered by his workplace.

Requested concerning the transfer, BlackRock mentioned in an announcement that “We’re disturbed by the rising pattern of political initiatives like this that sacrifice entry to high-quality investments and thereby jeopardize returns, which can in the end damage Florida’s residents. Fiduciaries ought to all the time worth efficiency over politics.”

Neither Patronis nor his workplace had raised any efficiency considerations, BlackRock mentioned, including it has invested greater than $65 billion in Florida-based corporations, municipal bonds and different securities.

Whereas BlackRock has inspired portfolio corporations to take steps like disclosing extra information about their carbon emissions or including extra numerous board members, it has mentioned its efforts are geared toward bettering firm efficiency and resisted requires steps like divesting from oil corporations. U.S. Democratic officers have argued BlackRock would not press ESG considerations sufficient.[L4N30T3PB]

Thus far, solely Republican-controlled states have made main reallocations away from BlackRock, together with $794 million pulled by Louisiana’s treasurer [L4N3162LQ] and $500 million by Missouri’s treasurer, each in October.

Different corporations additionally face Republican scrutiny. Earlier this week, Republican attorneys common from numerous states requested a federal regulator to restrict Vanguard Group Inc’s actions over ESG considerations, and requested United Parcel Service Inc (NYSE:) and FedEx Corp (NYSE:) to make clear their insurance policies on monitoring firearms shipments.

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