Florida pulls $2B worth of investments from BlackRock over ESG investment after DeSantis resolution

Florida Chief Financial Officer Jimmy Patronis announced on Thursday that the state’s government would divest $2 billion in investments under management by financial services company BlackRock due to the organization’s strengthening Environment, Social and Governance (ESG) standards.

“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,” wrote Patronis in a statement.

“I think it’s undemocratic of major asset managers to use their power to influence societal outcomes.”

Florida Gov. Ron DeSantis in August pushed through a resolution calling for the state to stop investing with ESG due to their “ideological agenda.”

BlackRock CEO Larry Fink released an open letter in January outlining the company’s increasing support for “stakeholder capitalism,” where the asset manager is able to choose clients in a socially conscious manner.

“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” Fink claimed in his letter.

The billionaire businessman is especially pushing environmental sustainability among its clients, announcing in his letter that BlackRock would require companies to set “short-, medium-, and long-term targets for greenhouse gas reductions.”

The Florida State Treasury will fully divest from BlackRock’s management by the beginning of 2023, according to Patronis.

Florida’s custody bank is currently freezing $1.43 billion in long-term securities that was managed by BlackRock and shifting management of $600 million in short-term overnight investments associated with the state’s Treasury Investment Pool.

The Treasury Investment Pool oversees the investment of Florida’s general revenue and trust funds as well as the funds of state-linked organizations including universities and government foundations.

“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,” said Patronis on Thursday, adding that he doesn’t “trust BlackRock’s ability to deliver.”

He criticized Fink’s use of ESG standards “to help police who should, and who should not gain access to capital.”

“Using our cash…to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for,” added the CFO.

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