Louisiana is pulling nearly $800 million in state treasury funds out of the investment firm BlackRock Inc. to protest its green energy commitments, joining several other Republican-leaning states that see Blackrock as a threat to the oil and gas industry.
Louisiana State Treasurer John Schroder explained his removal of $560 million in state funds from BlackRock in a letter to the company’s CEO earlier this month. The state will pull out a total of $794 million by the end of 2022, Schroder said.
“This divestment is necessary to protect Louisiana from mandates BlackRock has called for that would cripple our critical energy sector,” Schroder said in a prepared statement on Oct. 5. “I refuse to spend a penny of treasury funds with a company that will take food off tables, money out of pockets and jobs away from hardworking Louisianans.”
The divestments by states such as Louisiana, South Carolina and Utah come after Blackrock expressed support for so-called “net zero” environmental, social and governance (ESG) investment strategies that critics contend would lead to widespread economic harm to the fossil fuel industry. But a spokesperson for BlackRock downplayed the state divestment policies’ impact on the company.
“"BlackRock has built its business on providing our clients choice to reflect their unique goals and preferences,” the company spokesperson said in an email to the Louisiana Record. “While the actions of some state treasurers have attracted media headlines, they do not reflect the actions of the broad population of our clients who, for example, in the U.S. alone have allocated $258 billion of net new long-term assets to BlackRock over the last 12 months.”
The company will continue to provide clients the best financial outcomes possible that are in sync with their investment preferences, the spokesperson said.
But Schroder contends that ESG investing goes against the nation’s principles by bypassing the democratic process through the ballot box in favor of advancing political agendas.
The state treasurer’s actions come in the wake of a preliminary investigation by state Attorney General Jeff Landry that concluded three investment firms – BlackRock, Vanguard and State Street – may have deviated from the companies’ fiduciary duty to their Louisiana clients.
“The Big Three have a responsibility to invest with their client's best interests in mind rather than their own agenda on climate change, politics and other self-interests,” Landry said in a prepared statement.