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Florida pulls $2B from BlackRock, cites differences in investing philosophy

Jim Turner, Miami Herald on

Published in Business News

Florida will pull $2 billion from the largest asset-management firm in the world over ideological differences.

State Chief Financial Officer Jimmy Patronis announced Thursday that Florida will immediately freeze about $1.43 billion in long-term securities and about $600 million in short-term overnight investments managed by BlackRock because of the firm’s use of “Environmental, Social, and Governance” standards — known as ESG.

Patronis in a statement said he doesn’t “trust BlackRock’s ability to deliver” and “BlackRock CEO Larry Fink is on a campaign to change the world.”

“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,” Patronis said.

Republican leaders in Florida and across the country have targeted ESG ratings, which can involve considering a wide range of issues in investments, such as companies’ climate-change vulnerabilities; carbon emissions; racial inequality; product safety; supply-chain labor standards; privacy and data security; and executive compensation.

Patronis said the state Department of Financial Services oversees about $60 billion and that the money with BlackRock will be moved “elsewhere.”

 

“I think it’s undemocratic of major asset managers to use their power to influence societal outcomes,” Patronis said. “If Larry [Fink], or his friends on Wall Street, want to change the world — run for office. Start a nonprofit. 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.”

Fink is a leading proponent of ESG metrics. In a letter this year to corporate executives, Fink said companies using the standards are “performing better than their peers.”

“Stakeholder capitalism is not about politics,” Fink wrote. “It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”

As part of an October quarterly report, Fink said the New York-based BlackRock is built “to meet our clients’ needs across all market environments.”

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