- Jimmy Patronis announced the state treasury will be divesting $2 billion in assets that are currently managed by BlackRock
- The Florida Department of Financial Services manages approximately $60 billion in taxpayer money
Florida said on Thursday that it is divesting $2 billion worth of assets currently under management by BlackRock in response to the world’s biggest asset manager becoming a prominent backer of environmental, social and corporate governance (ESG) investing strategies.
In a press release, Chief Financial Officer Jimmy Patronis announced his department would immediately have Florida’s custody bank freeze approximately $1.43 billion worth of long-term securities and remove them as the manager of approximately $600 million worth of short-term overnight investments.
ESG investing is the practice of investing in firms or funds that seek market-rate financial returns while also targeting beneficial social and/or environmental impact. The ratings can involve a wide range of issues in investments, such as companies’ climate-change vulnerabilities; carbon emissions; racial inequality; product safety; supply-chain labor standards; privacy and data security; and executive compensation.
Despite becoming a popular investment trend, ESG investing has also become persona non grata for many on the political right.
Florida’s divestment — the largest of its kind by any state — comes as a growing number of Republicans push back against ESG investment criteria, which they say is a form of “woke capitalism.”
Patronis echoed the sentiments from GOP officials today, saying BlackRock’s political correctness has no place in the Sunshine State.
“As Florida’s Chief Financial Officer, it’s my responsibility to get the best returns possible for taxpayers. The more effective we are in investing dollars to generate a return, the more effective we’ll be in funding priorities like schools, hospitals and roads,” Patronis said. “As major banking institutions and economists predict a recession in the coming year, and as the Fed increases interest rates to combat the inflation crisis, I need partners within the financial services industry who are as committed to the bottom line as we are – and I don’t trust BlackRock’s ability to deliver.”
In a letter this year to corporate executives, founder and C.E.O. of BlackRock, Larry Fink, argued that companies using the standards are “performing better than their peers.”
“Stakeholder capitalism is not about politics,” Fink wrote. “It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”
Patronis was quick to lambast Fink for openly embracing ESG practices.
“BlackRock CEO Larry Fink is on a campaign to change the world. In an open letter to CEOs, he’s championed ‘stakeholder capitalism’ and believes that ‘capitalism has the power to shape society.’ To meet this end, the asset management company has leaned heavily into Environmental, Social, and Governance standards – known as ESG – to help police who should, and who should not gain access to capital.
“Whether stakeholder capitalism, or ESG standards, are being pushed by BlackRock for ideological reasons, or to develop social credit ratings, the effect is to avoid dealing with the messiness of democracy. I think it’s undemocratic of major asset managers to use their power to influence societal outcomes,” Patronis continued. “If Larry, or his friends on Wall Street, want to change the world – run for office. Start a non-profit. Donate to the causes you care about.”
BlackRock managed $1.43 billion of Florida’s Long Duration Portfolio, which manages investments such as corporate obligations, asset backed securities, and municipal bonds. Unlike the externally managed portfolios which are managed by 12 different asset managers, BlackRock exclusively managed Treasury’s $600 million Short Term Investment Fund (STIF), which is a cash sweep vehicle Treasury uses to assist long duration, intermediate duration, and short duration managers in managing their cash on a daily basis. This fund uses any excess cash that a portfolio manager may have at the end of the day and invests that cash into very short, very liquid type securities.
“Using our cash, however, to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for. It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do. Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns. As Larry Fink stated to CEOs ‘[A]ccess to capital is not a right. It is a privilege.’ As Florida’s CFO I agree wholeheartedly, so we’ll be taking Larry up on his offer,” Patronis added. “There’s no lack of companies who will invest on our behalf, so the Florida Treasury will be taking its business elsewhere.”
Here are three cheers for CFO Jimmy Patronis. Thank YOU for taking the bold step to tell Blackrock CEO Larry Fink that Florida won’t kowtow to his Far Left Woke agenda. Other states like West Virginia are doing this as well as Blackrock has been on a tear against coal and oil, but Florida stepping up and taking this important step will make news in financial circles and this is exactly the kind of pushback that Blackrock needs. It won’t change Fink’s approach, but perhaps it will make him at least think about what’s next on his agenda. I hope that Texas and other similar-thinking states will do the same thing – let Blackrock feel it in their wallet!
I love Florida and our government here.They are not rolling over to Disney ,BlackRock ,or any of this woke garbage.
You guys might go back and read the whole story:
“Founder and C.E.O. of BlackRock, Larry Fink, argued that companies using the standards are ‘performing better than their peers.’ . . . ‘Stakeholder capitalism is not about politics,’ Fink wrote. ‘It is not a social or ideological agenda. It is not “woke.” It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.'”
What DeSantis doesn’t understand is that ESG is good business — that companies must take climate change, social change, demographic change and other things the right-wingers don’t like into account. The U.S. financial community is pretty much in agreement about this. DeSantis is making Florida look backward and ridiculous.
The voters will be watching to see that CFO Jimmy Patronis delivers a higher return on the investment of the taxpayer’s funds than Blackrock was delivering. The voters wish Patronis would take interest in the plight of the state’s beleaguered homeowners that are burdened with cancelled or ever increasing homeowners insurance.
Dear heavens, how far will DeSantis actually go to please his unwoke base? He’s against a sustainable America but insists on keeping over $300,000,000 of our pension money in Russian banks and companies. Yes, Republicans adore Russia and they’d like to remake The United States in its image. They’ve already began to turn public education into indoctrination camps to forward their “Christian nationalism” goal. It’s all so despicable, there aren’t words to describe the path they’re on. P.S. Ron DeSantis will NEVER be president of the United States of America. He might, however, be able to replace Vladimir Putin.