North Carolina state treasurer wants Blackrock CEO to resign over ESG policies

North Carolina Retirement Systems invests about $14 billion through BlackRock in mostly passive funds.

Published: December 9, 2022 3:35pm

Updated: December 9, 2022 11:38pm

(The Center Square) -

North Carolina Treasurer Dale Folwell is calling on BlackRock CEO Larry Fink to resign over his focus on Environmental, Social and Corporate Governance initiatives.

Folwell criticized Fink's "wacktivism" in a Friday news release that demonstrated how BlackRock's ESG policies are conflicting with its fiduciary duty and voiced support for state laws that require divestment from firms that boycott the fossil fuel industry.

"As keeper of the public purse my duty is to manage our investments to ensure that the best interests of those that teach, protect and serve, as well as of our retirees, are always paramount," Folwell said.

North Carolina Retirement Systems invests about $14 billion through BlackRock in mostly passive funds and about $55 million in BlackRock stocks or bonds. Under Fink's leadership, BlackRock has leveraged its position as one of the world's largest asset managers with $9.5 trillion under management to push companies to adopt ESG policies with the help of the Glasgow Financial Alliance for Net Zero and Climate Action 100+.

The ESG initiatives, which screen investments based on how companies address climate change and other social issues, have drawn fierce backlash from conservatives who oppose the forced transition to "clean energy" and the social policies ESG promotes.

"Unfortunately, Mr. Fink's political agenda has gotten in the way of his same fiduciary duty," Folwell argued. "A focus on ESG is not a focus on returns and potentially could force us to violate our own fiduciary duty of loyalty.

"Ultimately, Mr. Fink's continued ideological pressure could result in using ESG scores against states and local governments, lowering their credit ratings and thus driving up their cost of borrowing at taxpayers' expense."

Folwell, who also chairs the State Banking Commission and Local Government Commission, described how BlackRock has used proxy voting authority from clients to block board members at ExxonMobil over "insignificant progress" toward ESG goals and how backlash resulted in a new proxy voting system called Voting Choice.

Folwell notes that Fink's attack on the fossil fuel industry comes as 19 of the 20 best-performing companies in the S&P 500 are fossil fuel producers or connected to the industry. ExxonMobil is ranked in the top 10 of the S&P 500 ESG Index, while the world's largest electric car company, Tesla, was removed from the index, he said.

Folwell cited Tesla CEO Elon Musk's description of the situation as "wacktivism," and argued both the ESG policies and BlackRock's Voting Choice proxy voting system are bad for investors.

"The existence of the proxy voting program does not mitigate the need for a new direction at BlackRock," he said. "There is no blue money or red money at the treasurer's office, only green. As the fiduciary for the North Carolina Retirement Systems, we seek not to be political, but mathematical.

"BlackRock needs to be totally focused on returns for their clients, not on the political effort to 'transform' the economy into their vision of carbon zero," Folwell said. "Fossil fuels will be the engine that drives the world's economy for the foreseeable future. The only way that I can see BlackRock refocusing on their fiduciary duty to their clients is for a change at the top."

Fowell, who manages the ninth-largest public pension in the country at $111.4 billion, said he also supports laws like Texas' "Eliminate Political Boycotts Act," which require the state's pension and school endowment to divest from firms that boycott the fossil fuel industry.

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