Louisiana has informed BlackRock that the state will be liquidating all investments in the corporation, blaming it for the promotion of politically driven green energy—under environmental, social and governance (ESG) standards—over fossil fuels critical to the state’s economy.
“Your blatantly anti-fossil fuel policies would destroy Louisiana’s economy,” Treasurer John Schroder wrote (pdf), on Oct. 5, to Laurence Fink, CEO of BlackRock.
“Therefore, Louisiana Treasury will liquidate all BlackRock investments by the end of 2022. To date, we have divested $560 million. We are strategically divesting over a period of time so state money is not lost to the detriment of our citizens. Once complete, this divestment will reflect $794 million no longer entangled in BlackRock money market funds, mutual funds, or exchange-traded funds (ETFs) holdings.”
Louisiana is one of the top 10 crude oil-producing states in the country and the third highest producer of natural gas.
The divestment is “necessary” to protect Louisiana’s fossil fuel sector, and the continued support of ESG investing by BlackRock is “inconsistent” with the “economic interests and values of Louisiana,” said Schroder, adding, “I cannot support an institution that would deny our state the benefit of one of its most robust assets.”
Pushback From States
Placing ESG’s political and social goals above “the duty to enhance investors’ returns is unacceptable under Louisiana law,” Schroder said, pointing to the letter signed by 19 state attorneys general sent to BlackRock earlier denouncing the increasingly progressive stance adopted by the investment company.
“BlackRock’s past public commitments indicate that it has used citizens’ assets to pressure companies to comply with international agreements such as the Paris Agreement that force the phase-out of fossil fuels, increase energy prices, drive inflation, and weaken the national security of the United States,” said the August joint-letter (pdf).
“These agreements have never been ratified by the United States Senate. The Senators elected by the citizens of this country determine which international agreements have the force of law, not BlackRock.”
In an emailed statement to The Epoch Times, BlackRock shared a part of its response to the joint-letter, stating, “We are disturbed by the emerging trend of political initiatives that sacrifice pension plans’ access to high-quality investments—and thereby jeopardize pensioners’ financial returns.”
The Business of ESG
This year, BlackRock recorded the largest amount of money ever lost by a single firm over a six-month period when it lost $1.7 trillion of clients’ money during the first half of 2022. The corporate-behemoth manages nearly $8.49 trillion of assets, as of June 30.
“Under Louisiana law, investors’ returns take precedence,” said Schroder. “I’m convinced that ESG investing is more than bad business; it’s a threat to our founding principles: democracy, economic freedom, and individual liberty.”
Schroder accused investment companies, like BlackRock, of using ESG to bypass the democratic process and push forward political agendas through compelling firms into putting “political motivations above a company’s profits and investors’ returns.”
He said, “Simply put, we cannot be party to the crippling of our own economy.”
Louisiana’s move follows other Republican states, such as Florida, that passed a resolution directing the state’s fund managers to make investments that do not involve ESG.
“Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity,” said Florida Governor Ron DeSantis in a written statement.
Florida now will no longer allow fund managers to allocate pension funds’ capital of $228 billion to be invested under ESG.
In late August, Texas released a list of 10 financial companies and almost 350 funds said to be boycotting energy firms involved in fossil fuels, under Texas Senate Bill 13. The list included BlackRock, Credit Suisse, and UBS, which were slated for potential divestment due to ESG-promotion.
ESG investing is a set of standards for maintaining a company’s behavior in relation to its social and environmental commitments. According to Morgan Stanley, ESG is based on “environmental, social, and governance factors alongside financial factors in the investment decision-making process.”
However, James Lindsay, the author of “Race Marxism,” described ESG as a “weapon in the hands of ‘social justice warriors’ to shake down corporations and a tool in the hands of those seeking to impose ‘one world government.’”
