Missouri pulls BlackRock funds as New York City reiterates climate criticisms

State claims BlackRock refused to stop exercising its proxy votes following request over ESG voting

BlackRock has come under criticism from both sides of the political aisle after the state of Missouri decided to pull $500 million of assets and New York City comptroller Brad Lander reiterated criticisms of its climate record.

Missouri treasurer Scott Fitzpatrick announced on Tuesday that the state employees’ retirement system had completed the sale of around $500 million of equity holdings managed by BlackRock, which have now been transferred to $426 billion Missouri-based manager NISA.

The Missouri state pension fund had already tried to ban BlackRock and other unnamed asset managers from voting its proxies in response to voting decisions which it claimed “advance left-wing social and political causes” to the detriment of shareholders. However, Fitzpatrick said the trigger for the sale was BlackRock refusing to abstain from voting the system’s proxies.

A spokesperson for BlackRock highlighted its voting choice offering, which is available to all US public pension plans, and allows them to set their own voting policies. The spokesperson declined to comment further on the allegation that it had refused to abstain from voting Missouri’s proxies.

A spokesperson for the treasurer told RI that the fund had chosen not to use the voting choice service as the treasurer “doesn’t have confidence that BlackRock’s advocacy interactions with the companies on issues outside of the proxy voting process would align with the goals of MOSERS proxy policy”.

The Missouri treasurer is the latest in a series of smaller states to pull funds from BlackRock in recent months. Louisiana treasurer John Schroder announced he was withdrawing $800 million earlier this month, while the manager lost $100 million of business from Utah in September and $125 million from Arkansas in March.

The BlackRock spokesperson said that, while some decisions by elected officials “have attracted media headlines”, they do not reflect the overall state of its asset flows. The spokesperson pointed to $248 billion of “net new long-term assets” accrued by the firm, including $84 billion in the US in Q3 alone.

Climate criticism

BlackRock also came under fire in comments by New York City comptroller Brad Lander on its response to a UK parliamentary inquiry into financial institutions and net zero. In its response to questions from the UK’s Environmental Audit Committee, BlackRock said it would not stop investing in fossil fuels, as its role is not to “engineer a specific decarbonisation outcome in the real economy”.

Lander, who has repeatedly raised the prospect of pulling New York’s funds from the firm over poor performance on climate issues, said on Twitter that BlackRock and other managers “can’t have it both ways”.

Lander added that climate change was a systemic risk and that keeping fossil fuels in the ground was central to mitigating that risk, as well as reiterating statements from his highly critical letter to BlackRock last month.

BlackRock was responsible for $62.5 billion of New York pension money at the end of May.