BlackRock has lost more than $1 billion in asset management deals in Republican US states upset with the company’s green investment policies, withdrawals that have become a political issue but so far have not affected the income of the company.
In an interview with the Financial Times, South Carolina State Treasurer Curtis Loftis said he would take $200 million out of BlackRock by the end of the year. Louisiana Treasurer John Schroder said last week that he will withdraw $794 million from BlackRock. Utah Treasurer Marlo Oaks said he liquidated $100 million in BlackRock funds and Arkansas reportedly got $125 million this year.
As the global phenomenon of sustainable investing grew (it has increased by $1 trillion since 2020), BlackRock jumped into action. The firm manages five of the top 20 US sustainable funds by assets, more than any other investment manager, according to Morningstar.
Beyond his fund offerings, Chief Executive Larry Fink has pushed companies to reduce their carbon emissions and threatened to weed out laggards from actively managed funds, policies that have targeted BlackRock in Republican states. .
Loftis said he previously turned down BlackRock as manager of a $41 billion fund his office oversaw due to concerns about its environmental, social and governance (ESG) policies. Instead, he said that he chose Federated Hermes to manage the fund.
Pittsburgh-based Federated Hermes also offers ESG funding and widely promotes its leadership in this space, especially since its acquisition of London-based Hermes in 2018. But Federated has been one of the top donors to the State Financial Officers. Foundation, an organization of Republican treasurers that includes Loftis.
After pressure from foreign pension funds, Federated Hermes withdrew its sponsorship of SFOF, the FT previously reported. Now, the SFOF does not list corporate sponsors on its website.
Earlier this year, Invesco and Fidelity were also listed as sponsors of SFOF.
Loftis said that Fink was “a very smart guy” and that he admired him. But he accused the people who push sustainable investing of hypocrisy.
“A lot of this doesn’t help the people it’s supposed to help,” Loftis said. “That’s why I’ve really recovered.”
“Poor people, historical minorities, money and services are being diverted for these globalist and leftist ideas,” he said.
BlackRock declined to comment, but pointed to a letter the company sent to state attorneys general in August to defend its ESG policies.
The Republicans’ rush to cut ties with BlackRock didn’t hurt its underlying business, Morningstar analyst Greggory Warren said. The BlackRock funds that Republicans had dropped were often cash-like products with small fees, he said. The Republican ESG backlash was a “political posturing” ahead of the November election, he added.
US state treasurers generally oversee cash management, bond transactions, and certain aspects of a state’s retirement funds. Although BlackRock has become the favorite punching bag of Republican treasurers, other financial companies have also been affected.
In West Virginia, the treasurer’s office will transfer banking services out of JPMorgan Chase in late November, according to a spokesman. West Virginia earlier this year banished JPMorgan, BlackRock and three other banks for allegedly harming energy companies, the state treasurer said.
In Utah, Oaks said his fiduciary duty led him to leave BlackRock. The company had followed a “dual mandate” in meeting with companies about climate change concerns, he said. “We need to make sure the money is not used to further a separate agenda other than our fiduciary duty,” he added.