BlackRock Inc. (NYSE: NYSE:BLK), the world’s biggest asset manager, is reportedly facing a backlash over its environmental, social and governance, or ESG, initiatives.
What Happened: Republican-ruled U.S. states have withdrawn more than $1 billion in assets held with BlackRock due to their opposition to the asset manager’s green investing policies, according to a report in Financial Times.
- South Carolina is pulling $200 million from BlackRock by the end of 2022, state treasurer Curtis Loftis reportedly said.
- Utah’s treasurer Marlo Oaks and Arkansas withdrew $794 million and $125 million, respectively, this year.
- Louisiana treasurer John Schroder communicated to BlackRock last week that he would divest all Treasury funds from the company. About $560 million have already been removed in the year-to-date period, and another $794 million will be removed by the year-end.
Why It’s Important: The withdrawals could hurt BlackRock, which has stepped up its green drive by floating sustainable funds. The company manages five of the top 20 U.S. sustainable funds by assets, more than any of its peers, the report said, citing Morningstar database.
BlackRock CEO Larry Fink has been pushing for companies to cut emissions. In the event of non-compliance or weak compliance, he has threatened to drop them from the firm’s actively-managed funds, the report said.
South Carolina’s Loftis had previously rejected BlackRock as a manager for a $41 billion fund his office owned due to concerns about its ESG policies, FT said.
“So much of it does not help the people it is supposed to help,” Loftis said, adding that “Poor people, historical minorities, are having money and services diverted from them for these globalist, leftist ideas.”
The withdrawals shouldn’t affect BlackRock significantly, the report said, citing Morningstar analyst Greggory Warren. The BlackRock funds the Republicans had dropped were often cash-like products with small fees, he said.
The Republicans’ ESG backlash was “political posturing” ahead of elections in November, he added.
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