Missouri withdraws money from management firm in political move

Treasurer cites, “woke political agenda” instead of performance in move.
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Published: Oct. 18, 2022 at 6:58 PM CDT
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SPRINGFIELD, Mo. (KY3) - Missouri’s State Treasurer announced the Missouri State Employees Retirement System (MOSERS) has sold all public equities managed by BlackRock, Inc., pulling approximately $500 million in pension funds from the investment manager.

We should not allow asset managers such as BlackRock, who have demonstrated that they will prioritize advancing a woke political agenda above the financial interests of their customers, to continue speaking on behalf of the state of Missouri,” said Treasurer Scott Fitzpatrick.

KY3 asked the treasurer’s office for the performance track record of BlackRock in Missouri.

“The assets with BlackRock were passively managed, so their performance is just the performance of the index in which the assets were invested,” said Communications Director Mary Compton. “The treasurer’s concern is the impact BlackRock is having on all of the companies in which they hold stock on behalf of their investors, and that their advocacy and proxy voting is having a negative effect on returns for all investors, regardless of who is managing their money.”

Meantime BlackRock also released a statement.

“BlackRock has built its business on providing our clients’ choices to reflect their unique goals and preferences. While the actions of some elected officials have attracted media headlines, they do not reflect the totality of our clients’ investment decisions. For example, clients have awarded BlackRock $248 billion of net new long-term assets this year, including $84 billion in the third quarter in the United States alone. We remain committed to offering our clients choice and delivering them the best financial outcomes consistent with their preferences.”

In May of this year, the Associated Press reported Republicans are coming out swinging against Wall Street’s growing efforts to consider factors like long-term environmental risk in investment decisions, the latest indication that the GOP is willing to damage its relationship with big business to score culture-war points.

Many are targeting a concept known as ESG, which stands for environmental, social, and governance — a sustainable investment trend sweeping the financial world. Red state officials deride it as politically correct and woke and are trying to stop investors who contract with states from adopting it on any level.

The concept calls on investors to consider criteria such as environmental risk, pay equity, or how transparent companies are in their accounting practices. Aided by recently proposed disclosure requirements and analysis from rating agencies, they have adopted the principles to such an extent that those who use them control $16.6 trillion in investments held in the U.S.

In response, Republicans, historically known for supporting fewer regulations, are in many places attempting to impose new rules on investors. Their efforts reflect how members of the party are willing to distance themselves from big business to push back against those they see as ideological foes.

Opponents criticize ESG as politicized and a potentially costly diversion from purely financial investment principles, while advocates say considering the criteria more accurately accounts for risk and promises steadier returns.

“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,” Larry Fink, CEO of investment firm BlackRock and a leading proponent, told clients in a letter this year.

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