EXCLUSIVE: The treasurer of one of the largest state pension funds in the US is urging BlackRock CEO Larry Fink to resign from the investment firm over its environmental, social, and governance ESG policies.
North Carolina State Treasurer Dale Folwell wrote a letter to BlackRock's board of directors calling for Fink to step aside because the CEO's pursuit of a political agenda has gotten in the way of BlackRock's fiduciary duty to its investors. Folwell wrote that a focus on ESG is not a focus on returns and could force us to violate our fiduciary duty.
He said that the North Carolina Retirement System NCRS, valued at roughly $111 billion, has invested roughly $14 billion through BlackRock in a variety of active and passive funds, in addition to $55 million passively invested in BlackRock's stocks and bonds. He wrote: There is no blue money or red money at the treasurer's office, only green. As a fiduciary for NCRS, I try not to be political, but mathematical. BlackRock is currently the world's largest asset manager with approximately $8 trillion under management and is one of several major financial institutions that have led the charge for the adoption of ESG standards in recent years. The financial sector is the target of the ESG movement, which seeks to and left-wing social priorities.
The policies of the ESG by BlackRock have attracted the ire of investors and state policymakers alike. Florida's chief financial officer said last week that the state's treasury is taking action to remove $2 billion in assets from BlackRock's stewardship before the end of the year.
In October, Louisiana and Missouri announced that they would reallocate state pension funds away from BlackRock, which amounted to approximately $1.3 billion in combined assets. The Texas legislature has subpoenaed BlackRock for financial documents.
BlackRock's stance against investing in fossil fuels has been a point of controversy for its detractors, despite its broad push for ESG. Folwell said in his letter that Fink used BlackRock's clients' votes against two management-supported board members of ExxonMobil in 2020 because of the insignificant progress towards green energy. The stock of ExxonMobil rose 60% in the past 12 months, due to an increase in demand for oil. BlackRock needs to be focused on returns for their clients, not on the political effort to transform the economy to your vision of carbon zero. Folwell told the BlackRock board that Fossil fuels will be the engine that drives the world's economy for the foreseeable future.
Over the last year, BlackRock has rolled out a proxy voting program that allows certain groups of the firm's clients to weigh in on investment decisions.
Folwell informed BlackRock's board that the NCRS will begin voting on shares it has under the management of BlackRock in an effort to counteract the investment giant's ESG push, but said the existence of the proxy voting program does not mitigate the need for a new direction at BlackRock. Folwell's letter to the BlackRock board concluded that Fink must leave the firm to focus on his fiduciary duty to investors. I'm skeptical that he would or could lead the necessary course correction given his dogged pursuit of these political objectives over a number of years. I request that he resign or be removed from the asset management team immediately after losing confidence in his leadership to responsibly steward investors' resources.