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West Virginia fires BlackRock over asset manager's climate and China stance


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West Virginia fires BlackRock over asset manager's climate and China stance

West Virginia decided to cut ties with BlackRock Inc. over the asset manager's 2021 decision to push clients toward net-zero emission goals and its recently obtained license to operate in China.

State Treasurer Riley Moore announced Jan. 17 that West Virginia will no longer use the world's largest investment firm to run banking transactions for the state's $8 billion operations. The move comes a month after Florida Gov. Ron DeSantis' administration took steps to rid his state's large pension funds from "woke" fund managers with investments in China.

West Virginia had been using a BlackRock liquidity fund as a sweep account to generate interest when deposits came in late, said Jared Hunt, a Moore spokesman. The fund contained about $21.8 million on Jan. 6, the day the state switched its banking business to a similar fund managed by the investment house BNY Mellon, Hunt said in an interview.

In November 2021, Moore formed a 15-state coalition of state financial officers from Republican-led states willing to curtail any business with banks that "adopt corporate policies to cut off financing for the coal, oil and natural gas industries." West Virginia appears to be the first state to follow through on that pledge, Hunt said.

BlackRock did not immediately return a request for comment. In his annual letter to CEOs released Jan. 17, BlackRock CEO Larry Fink appeared to respond to critics of his firm's increased focus on climate risks and shareholder advocacy.

"Stakeholder capitalism is not about politics," Fink wrote. "It is not a social or ideological agenda. It is not 'woke.' It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism."

BlackRock walks fine line

Fink's letter struck a different tone than the one he penned last year, which framed climate change as a risk as well as an investment opportunity. "No issue ranks higher than climate change on our clients' lists of priorities," Fink wrote then. "They ask us about it nearly every day."

Ben Cushing, a campaign manager for the Sierra Club, said BlackRock continues to invest in natural gas and other fossil fuels as it seeks to appease investors with climate talk.

"Larry Fink's latest letter to CEOs is just another rehashing of the same vague rhetoric, without any meaningful new commitment to actually help lead the necessary transition to a climate-safe future," Cushing said in a Jan. 18 statement.

BlackRock has also come under fire in the last year for gaining a license from the Chinese government to start a wholly owned mutual fund in the country of 1.4 billion people. The company was the first foreign asset manager to receive permission to operate in China.

Fink is "pouring billions in new capital into China, turning a blind eye to abhorrent human rights violations, genocide and that country’s role in creating the COVID-19 global pandemic," Moore said in a statement. "Any company that thinks Communist China is a better investment than West Virginia energy or American capitalism clearly has a bad strategy. We will continue to give our state's business to people who aren't simultaneously trying to destroy our economy."

At the end of 2021, BlackRock had a record $10 trillion in assets under management and the firm reported a 20% increase in full-year revenue.