Florida divests $2B from BlackRock as movement against woke investing matures

The Florida Treasury is divesting an initial $2 billion from BlackRock, the archetype of “woke” investing, as the state steps up its fight against stakeholder capitalism.

The Treasury pulled $1.4 billion in long-term securities from BlackRock and removed the investment management company as the overseer of $600 million in short-term overnight investments, according to Chief Financial Officer Jimmy Patronis. By the beginning of 2023, the Republican official expects the Treasury to fully separate itself and the state’s Treasury Investment Pool from BlackRock.

After the investment giant received criticisms for its resources in fossil fuels, BlackRock CEO Larry Fink in 2020 announced plans to move toward environmentally sustainable investments. The move is costing them in Florida and elsewhere.

“If Larry and his friends on Wall Street want to change the world, they should run for office, start a not-for-profit and go donate to the causes they care about,” Patronis said Thursday, speaking at an annual meeting of budget watchdogs at Florida TaxWatch. “But using our cash — the state of Florida’s cash — to fund BlackRock’s social-engineering projects isn’t something Florida ever signed up for.”

In recent years, conservatives have increasingly targeted stakeholder capitalism, which promotes the idea that corporations serve the public at large, not just shareholders. In particular, combating environmental, social and corporate governance criteria — or, simply, ESG — has become a rallying cry in the national culture war against “wokeness.”

While Patronis says Florida is the first to take such a major action, the Sunshine State is one of at least 10 states that have taken stances against ESG or BlackRock specifically.

North Dakota was the first state to enact an anti-ESG legislation in 2021, and Texas followed shortly after with boycott bills and this year “banned” BlackRock and other companies. In August, the Florida Cabinet approved rules preventing the State Board of Administration from basing pension plan investment decisions on more than just economic factors.

Patronis, Gov. Ron DeSantis and new House Speaker Paul Renner have been cheerleaders against ESG in Florida. Renner reiterated his intent to crack down on “ESG’s political dogma” during his speech after being sworn in as the House leader this month.

The CFO’s responsibility is to get the best returns for taxpayers, Patronis said in his statement. Generating returns means better funds for schools, hospitals and roads.

Patronis also said economists predict a recession in the coming year, although he believes the country is already in one. He needs partners committed to the core role of fund managers, he continued.

“I understand the importance of the bottom line of what I did in the restaurant business for 30 years of my life, and I just don’t see that type of trust being pushed forward out of BlackRock by their actions here,” Patronis said.

As head of the Department of Financial Services, Patronis oversees $60 billion in taxpayer money.

BlackRock managed $1.43 billion of Florida’s Long Duration Portfolio, which manages investments such as corporate obligations, asset-backed securities and municipal bonds. BlackRock also exclusively managed the Treasury’s $600 million Short Term Investment Fund (STIF), which uses excess cash to boost Florida’s investments.

“As Larry Fink stated, ‘access to capital is not a right. It is a privilege.’ As Florida’s CFO, I agree wholeheartedly with him. So, we’re taking up Larry on his offer,” Patronis said. “There’s no lack of companies who will be glad to invest on behalf of the state of Florida, and the state Treasury will be taking its business elsewhere.”

BlackRock is in the middle of the pack as far as returns, Patronis told Florida Politics, meaning the state has options on where to take their money.

He reiterated his need for a partner, like a car buyer may invest in that car’s brand.

“We’re not seeing that type of relationship right now with BlackRock, and I just don’t think it’s in the best interest of the state of Florida to be pouring money there right now,” Patronis said. “We’re letting our decision reflect where we want the best shareholder value on behalf of the citizens.”

More attention has come to ESG this year, as gas prices reached record highs across the country. With conservative blowback mounting against ESG, accusing the practice of injecting politics into investments at the expense of business and shareholders, ESG has been roped into the culture war against “woke ideology” in schools and other corporate practices.

Asked whether taking on BlackRock is a political move or anti-ESG, Patronis told Florida Politics the company isn’t generating the type of return he’s looking for.

“I can just go and look at their numbers and I can follow Fink’s philosophy of where he has taken their investment portfolio and come to my own conclusion that there’s probably better ways to get a better return on the taxpayers’ money,” he said.

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Jacob Ogles of Florida Politics contributed to this report.