Kentucky County Employees' Retirement System's board is informing state Treasurer Allison Ball it will not divest from BlackRock because doing so would violate its fiduciary duty.
The $10.8 billion Frankfort-based pension fund's board at its meeting on Wednesday approved a draft of a letter that responds to Ms. Ball's Jan. 3 publication of a list of 11 financial companies that she determined are engaged in boycotts of energy companies.
That list is a result of a law passed by the Kentucky General Assembly in 2022 that directs the state treasurer to publish a list of financial companies considered to be boycotting energy companies. According to the law, all companies on the list must "stop engaging in the energy company boycott to avoid becoming subject to divestment," she said in a Jan. 3 news release.
Ms. Ball has no authority over the investment management of the County Employees' Retirement System.
In a webcast of its meeting, Ed Owens III, CEO of CERS, who will sign the letter, said "We're simply informing the treasurer that we believe that to comply here would be inconsistent with our fiduciary duty."
A draft of the letter included with board meeting materials said the system has determined that requirements in state statute establishing the board's fiduciary responsibilities means the board is not subject to the requirements of the 2022 law.
Mr. Owens noted in the webcast that BlackRock manages about 30% of the pension fund's international equity portfolio.
BlackRock leads Ms. Ball's list, and the other 10 financial institutions are BNP Paribas, Citigroup, Climate First Bank, Danske Bank, HSBC, J.P. Morgan Chase & Co., Nordea Bank, Schroders, Svenska Handelsbanken and Swedbank.
In a statement issued when Ms. Ball released her list, BlackRock said the firm's "only agenda is delivering the best financial results for our clients. On behalf of our clients, we have invested approximately $276 billion in energy companies globally. BlackRock does not boycott energy companies and will continue to be investors across the energy sector."
Matt Frey, Ms. Ball's spokesman, said she has not yet received the letter.
