Arizona sells BlackRock pension fund for ESG push

Arizona is moving ahead with its plan to divest its BlackRock pension funds amid concerns about the investment firm’s massive push for environmental, social and governance (ESG) guidelines, which has prompted other states to take similar action.

Arizona Treasurer Kimberly Yee said in a statement released Thursday that the Treasury Department’s Investment Risk Management Committee (IRMC) began evaluating the relationship between the state’s pension fund and BlackRock in late 2021.

“Part of IRMC’s review was reading the annual letters from CEO Larry Fink, who in recent years has begun dictating companies in the United States to follow his personal political beliefs,” Yee wrote. “In short, BlackRock’s transition from a traditional wealth manager to a political action committee. Our internal investment team felt that this has shifted the firm from its fiduciary duty as a wealth manager generally.”


BlackRock headquarters in New York City

BlackRock offices in New York City. The company, along with nine others, has been called hostile to the state’s fossil fuel sector by Texas Comptroller Glenn Hegar. (Erik McGregor/LightRocket via Getty Images/Getty Images)

In response to those results, Yee noted that Arizona began selling over $543 million of BlackRock money market funds in February 2022 and “reduced our direct exposure to BlackRock by 97%” over the year. Yee added that Arizona “will continue to reduce our remaining exposure to BlackRock over time in a phased approach that incorporates a safe and prudent investment strategy that protects taxpayers.”

Although the state will continue to hold some BlackRock stock through stocks in a passive index of America’s 1,500 largest companies, Arizona will have “minimal direct exposure” to BlackRock, which will amount to “less than 1/10th of one percent of our total assets under management.” amounts. from the end of November. Yee said that Arizona intends to vote its stocks in the index to “change BlackRock’s political activism.”

“We will continue to resist the dangerous path of corporations pushing their social issues and wokeism into the investment arena, and return to traditional money management that puts people first,” Yee’s statement concluded.


BlackRock CEO Larry Fink

BlackRock Chairman and CEO Larry Fink arrives at the DealBook Summit in New York City on November 30, 2022. (Reuters/David “Dee” Delgado)

BlackRock is currently the world’s largest wealth manager, with approximately $8 trillion in assets under management, and one of several major financial institutions to have pushed the adoption of ESG standards in recent years. This is what the ESG movement is broadly striving for Promoting a green energy transition and left social priorities by the financial sector. Critics of the ESG movement argue that its focus on green investing contradicts companies’ fiduciary responsibility to deliver the best possible returns for investors.

BlackRock defended itself against criticism of its investment strategy in a statement to Fox Business, which read in part: “Over the past year, BlackRock has been the subject of campaigns that suggested we were either ‘too progressive’ or ‘too conservative’ in ways are how we manage our customers’ money. We are neither one nor the other. We are a trustee. We put our clients’ interests first and deliver the investment decisions and service they need. We will not let these campaigns stop us from delivering for our customers.”

The statement added, “In the U.S. alone, clients committed $84 billion in long-term net flows to BlackRock in the third quarter and $275 billion over the trailing 12 months.”


BlackRock Inc. Chief Executive Officer Larry Fink speaks during a Bloomberg Television interview in New York, Wednesday, April 19, 2017.  Fink said there are signs the U.S. economy is slowing as companies weigh whether the Trump administration will be able to quickly enact tax reform and an infrastructure program.  Photographer: Christopher Goodney/Bloomberg

BlackRock Inc. Chief Executive Officer Larry Fink speaks during an interview with Bloomberg Television in New York, U.S., on Wednesday, April 19, 2017. (Christopher Goodney/Bloomberg via Getty/Getty Images)

BlackRock’s ESG policies have drawn the ire of some investors and government policymakers alike.

Florida’s Chief Financial Officer recently announced that the state’s Treasury Department is taking action remove approximately $2 billion in assets out of BlackRock’s administration before the end of this year. In October, Louisiana and Missouri announced plans to reallocate BlackRock’s state pension funds, which totaled approximately $1.3 billion in assets. Combined with the Arizona divestment, those four states alone drained approximately $3.8 billion of BlackRock’s state pension funds.

In addition, the North Carolina Treasurer has called for the resignation of BlackRock CEO Larry Fink and the Texas Legislature has subpoenaed BlackRock for financial documents.


The investment firm has also faced criticism from activists who argue that BlackRock is not doing enough to meet its ESG commitments. New York comptroller Brad Lander wrote to Fink in September, citing an “alarming” discrepancy between the company’s words and actions. Lander wrote: “BlackRock cannot simultaneously state that climate risk is a systemic financial risk and argue that BlackRock has no role in mitigating the risks that climate change poses to its investments by supporting decarbonization in the real economy. “

BlackRock has insisted that its “role in the transition is to act as a fiduciary for our clients” and “help them manage investment risks and opportunities, rather than to achieve a specific decarbonization outcome in the real economy.”

Fox Business’ Breck Dumas contributed to this story.

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