Florida Governor Ron DeSantis is crusading against ESG investing and “woke capitalism,” with state officials pledging to purge such thinking from its pension funds and targeting BlackRock Inc. because of its support for the idea.
(Bloomberg) — Florida Governor Ron DeSantis is crusading against ESG investing and “woke capitalism,” with state officials pledging to purge such thinking from its pension funds and targeting BlackRock Inc. because of its support for the idea.
But BlackRock still manages billions in investments for the Sunshine State, and it turns out there wasn’t a lot of ESG to purge. A review of public records shows that BlackRock didn’t put the bulk of Florida’s money into environmental, social and governance investments in the first place.
The Florida State Board of Administration — which oversees roughly $180 billion in pension money — didn’t hold investments labeled as ESG when DeSantis ramped up his campaign last year, according to data compiled by Bloomberg. Even after the state’s treasury said it would pull $2 billion from BlackRock amid DeSantis’s criticism, the world’s largest asset manager still oversees $12.9 billion for the state’s retirement funds.
This week, Florida also barred a separate public employees’ fund from adopting sustainable strategies — but less than 1% of the $5.1 billion pool had been invested in ESG-labeled funds, according to Florida’s chief financial officer.
“This was a whole lot of hoopla for nothing,” said Democratic State Senator Jason Pizzo, a member of the senate appropriations committee, in an interview. “It’s another in a series of big announcements that result in little if any kind of results for anyone. It’s neither effective nor of any impact on anyone.”
Read more: Florida Escalates ESG War, Says Fink ‘Did It to Himself’
DeSantis, considered a front-runner for the 2024 Republican nomination for president, may be the most high-profile ESG opponent. But a review of Florida’s pension funds suggests little has changed as to how Florida invests its pension money since DeSantis began ramping up his anti-ESG campaign.
“The governor is protecting consumers by preventing entities from putting a ‘woke’, arbitrary financial metric and ideological agenda above fiduciary interests,” said Bryan Griffin, DeSantis’s press secretary, in an emailed statement, adding that BlackRock and 48 other asset managers “have agreed to abandon ESG metrics” when managing the state’s money.
BlackRock said in a statement last week it’s “committed to the Florida State Board of Administration’s mandate of prioritizing financial performance consistent with their investment objectives,” after Florida said investment decisions couldn’t consider “social, political, or ideological interests.”
BlackRock declined to comment further.
‘Social Statements’
The vast majority of the money in 13 BlackRock-labeled funds in the Florida pension portfolio was invested in broad stock and bond indexes, according to public records through June 2022.
The SBA “does not and never has invested to make social statements,” a spokesperson for the board said in a statement.
Pizzo, the Democratic state senator, said he plans to ask the governor’s advisers how much, if any, money had to be shifted out of Florida’s pension funds because it was invested using ESG criteria. Pizzo said he sees no signs that Florida has significant stakes in ESG investments.
“If they’re already not invested in social impact funds, it’s not really changing much,” Heather Wyckoff, a partner at Schulte Roth & Zabel law firm who advises investment funds on ESG, said in a phone interview. “Florida’s stance really doesn’t affect most fund managers as far as how they set up the products they offer or how they invest the products they’re managing.”
Republican state officials throughout the US have been campaigning against ESG investing, contending the strategy hurts their economies and pensions. Anti-ESG officials have targeted BlackRock and its Chief Executive Officer Larry Fink, who warned other CEOs in 2020 that “climate risk is investment risk.” At least six states said they plan to pull money from BlackRock, totaling more than $3 billion.
In December, Florida said it was withdrawing $2 billion out of state treasury funds from the money manager, more than any other state. But Florida signaled this month that BlackRock and other asset managers could keep overseeing its pension funds — as long as they don’t use ESG investing strategies.
‘Political Distraction’
While BlackRock continues to do business with Florida, DeSantis has promised more legislative action on ESG investing including a possible ban on banks from using “ESG scoring” in loans.
The Florida governor’s campaign against “woke capitalism” helped spur a backlash from Democrats and other advocates of social investing to pressure the biggest money managers — namely BlackRock — to do more, not less, to back sustainable investing.
This week, New York City Comptroller Brad Lander and three New York City pensions called for Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Royal Bank of Canada to publish greenhouse gas emissions targets for 2030.
In an interview this month, Lander said he plans to press BlackRock this year to take a stronger stance on climate change. BlackRock managed about $41.5 billion for three New York City pensions as of the end of October.
“The red state treasurers and AGs are waging a war of political distraction,” Lander said, referring to state attorneys general.
BlackRock’s Fink said last week in a Bloomberg interview that the narrative around ESG has become ugly and polarizing.
Despite those attacks, BlackRock reported largely positive earnings for the fourth quarter. Clients poured $146 billion into the money manager’s long-term products, beating the $124 billion estimate of analysts surveyed by Bloomberg.
Shares of BlackRock rose 0.3% to $753.30 at 1:35 p.m. in New York, extending its gain for the year to 6.3%.
(Updates with stock price in final paragraph.)
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