OKLAHOMA CITY – In the midst of a crusade by Gov. Kevin Stitt and state Treasurer Todd Russ against a range of progressive policies, state officials met with BlackRock representatives this week to discuss the firm’s ban from doing state business.
The investment giant will lose access to funds it manages for the state’s public retirement system because of a state law passed by GOP lawmakers and signed by Stitt in 2022. The legislation, House Bill 2034, bans state investments from going to companies with environmental, social and governance, or ESG, investing policy.
BlackRock manages 60% of the state’s $10.2 billion pension fund. The New York-based multinational investment firm is the world’s largest asset manager, with $8.66 trillion under management as of Dec. 31, 2022, according to company records.
Oklahoma’s ban is part of a movement from states with Republican leadership who claim ESG policy is leading Wall Street toward “woke investing,” according to Stitt, who said this week the institutions are trying to push a political agenda.
“BlackRock doesn’t want to turn into the next Bud Light, that’s for sure,” Stitt said at a Thursday press conference, a reference to a controversial beer commercial that featured a transgendered person. “They’re traveling the country and very concerned when they show up on a list.”
The nationwide move by GOP-controlled legislatures has been criticized roundly by social activists as reactionary and by business leaders as shortsighted.
Earlier this year, Russ launched an effort to identify national companies with policies deemed to counter interests of Oklahoma’s energy industry. The Republican treasurer sent a questionnaire to more than 100 financial institutions to determine if their policies were banned under HB 2034.
The analysis determined giant institutions including BlackRock, JP Morgan Chase & Co., State Street and Bank of America, among others, are ineligible for state contracts because of pro-ESG policy, according to a treasurer’s office release earlier this month. Companies may be added to or removed from the ineligible list every 90 days.
Following the release of the list, BlackRock released a statement saying it invests over $15 billion in public energy companies based in Oklahoma, $320 billion in the industry globally and billions more in renewable energy.
“BlackRock offers our clients the choices to help them achieve their investment objectives,” the statement reads. “Boycott lists raise costs for Oklahoma taxpayers and reduce returns for firefighters, teachers, and state employees seeking to retire with dignity.”
According to the BlackRock website, the firm’s “investment conviction is that climate risk is investment risk.”
“We believe that society is on the cusp of transformational change towards sustainability,” its policy page reads.
Renewable energy investment strategies have increased alongside climate change awareness in recent years, but are under attack from GOP lawmakers, as states like Texas expand their efforts against ESG policy.
In 2021, Texas Gov. Greg Abbott signed similar legislation, as well as an executive order directing state agencies to use lawful powers to challenge green investments.
President Joe Biden in March used his first veto of his presidency to repeal a Department of Labor rule that would have allowed retirement fund managers to consider ESG principles in their investment decisions.
Meanwhile, conservative Republicans who want to thwart socially and environmentally conscious investing are being pushed to water down their proposals after backlash from powerful business groups and fears that state pension systems could see huge losses.
In both Kansas and Indiana, where the GOP has legislative supermajorities, banker associations and state chambers of commerce criticized the strongest versions of anti-ESG legislation currently under consideration as anti-free market.
In Kansas, their opposition prompted a Senate committee’s chairman to drop the toughest version of its bill – applying anti-ESG rules to firms handling private investments – before hearings began this week. He also canceled a Thursday discussion of a milder version of an anti-ESG bill after the head of the state pension system for teachers and government workers warned that it could see $3.6 billion in losses over 10 years if the bill were passed.
And last month, legislative researchers in Indiana reported that the state’s pension system expected the first version of
a House bill to cost the system $6.7 billion over 10 years, prompting lawmakers to rewrite it before the chamber
passed it.The Associated Press contributed to this report.
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