The state’s chief financial officers, Jimmy Patronis, said that the state’s treasury will be dumping BlackRock, the real estate firm that controls nearly $2 billion of Florida state securities.
BlackRock’s use of the “Environmental Social and Governance standards” (also known as ESG scoring) was the main reason for the move. This standard places emphasis on social justice when deciding who can access capital.
The state has ordered Florida’s custody bank immediately to remove BlackRock managers from their positions as manager of securities. BlackRock will not manage $600 million worth of short-term investments and will therefore immediately freeze $1.43 billion of long-term securities. “By 2023, Florida will have severed all financial ties to Blackrock.”
The CFO stated that Larry Fink, CEO of BlackRock, is on a mission to change the world. “ESG standards are used by asset management companies to assist police in determining who should, and should not, have access to capital.”
BlackRock managed $1.43 billion in investments related to corporate obligations, asset backed secruties and municipal bonds. The Florida Department of Financial Services has approximately $60 billion of taxpayer money.
BlackRock is pushing ESG standards and stakeholder capitalism to create social credit ratings or ideological reasons. The effect is to avoid the messy business of democracy. Patronis stated that it was undemocratic for major asset managers to use their influence to affect societal outcomes.
BlackRock’s management was also described by the Treasury as a “social engineering project” and “is not something Florida signed up for.”
Patronis repeatedly singled out Larry Fink, BlackRock CEO, multiple times for criticizing his views on monetary access. He stated that “[BlackRock leaders] openly stated they have other goals than producing returns.” Larry Fink said to CEOs that “[A]ccess is not a right.” It is a privilege. As Florida’s CFO, I fully agree with Larry’s offer.
Although the loss is only a fraction of BlackRock’s $8 trillion assets, the company took the decision seriously. According to Reuters BlackRock believes that the action “put politics over investors’ interests”. There was a lot of backlash from Republican leaders, who view ESG investing as a “woke agenda”.