Florida Chief Financial Officer Jimmy Patronis wants the $217.5 billion Florida State Board of Administration, Tallahassee, to terminate BlackRock from over $13 billion it manages for funds the board oversees.
On Wednesday, Mr. Patronis sent a letter to Lamar Taylor, interim executive director and chief investment officer of the Florida State Board, saying he believes the board should "transition away" from BlackRock.
In the letter posted on his website, Mr. Patronis reiterates the reasons he terminated BlackRock from the management of $2 billion in the state's long-duration portfolio and its short-term investment fund, saying "it's hard for me to imagine a scenario where the SBA can continue its partnership with BlackRock. There are other firms in this space and BlackRock is not entitled to our pension funds."
In a Dec. 1 news release, Mr. Patronis announced the termination of BlackRock due to what he terms as CEO Laurence D. Fink's "campaign to change the world" in utilizing environmental, social and governance standards.
BlackRock is the sole manager of the $600 million short-term investment fund and manages $1.4 billion as one of 12 managers in the state's Treasury division long-duration portfolio.
In the letter to Mr. Taylor, Mr. Patronis writes that "Florida is fortunate to have a Governor (Ron DeSantis) and legislative leaders who have expressed an interest in ridding Florida of ESG. I join their calls, as well as the calls of many other Treasurers throughout the nation in voicing our concerns for what's happening within the financial services sector."
Mr. Patronis has not said whether other managers who have publicly expressed support for ESG investing will also be terminated, and Devin Galetta, his spokesman, has not replied to requests for further information.
Among the 11 other external managers in the long-duration portfolio, 10 managers are listed as signatories to the United Nations Principles for Responsible Investing on the U.N.'s website. The first of those principles is: "We will incorporate ESG issues into investment analysis and decision-making processes."
The managers all signed the United Nations Principles for Responsible Investing between 2006 and 2021. Two managers, Amundi and Insight Investment, are also signatories on the Net Zero Asset Managers initiative, a group that has committed to support the goal of the Paris Agreement to limit global temperature rises to 1.5 degrees Celsius and to support investing aligned with achieving net-zero emissions by 2050 or sooner.
The other 10 managers and the amount they managed in the long-duration portfolio as of March 31, according to its most recent available investment report, are Galliard Capital Management, $1.6 billion; Sterling Capital Management, $1.6 billion; Fidelity Investments, $1.4 billion; Manulife Investment Management, $1.2 billion; Amundi, $1.2 billion; PGIM Fixed Income, $1.1 billion; Western Asset Management Co., $901 million; Goldman Sachs Asset Management, $824 million; Nuveen, $430 million; and Insight Investment, $231 million.
Mr. Patronis sits on the Florida State Board of Administration along with Mr. DeSantis and Attorney General Ashley Moody.
BlackRock is currently an underlying manager for the FRS U.S. Enhanced Bond Index Fund and FRS Inflation Sensitive Fund, two white-label investment options offered by the $12.3 billion Florida Retirement System Investment Plan, a defined contribution plan.
SBA spokeswoman Emilie Oglesby said in a Dec. 1 email that BlackRock manages about $13.2 billion for the Florida Retirement System pension fund.
In an emailed response on Thursday, she said "The SBA will always follow the direction of our three Trustees and the Legislature as we invest funds for the exclusive benefit of Florida Retirement System (FRS) participants. Consistent with our fiduciary duty required by law, all managers used by the SBA are selected solely for the purpose of maximizing financial return, managing risk, defraying reasonable costs and diversifying plan assets, and any investment made by managers on behalf of the SBA is based on contractual terms that incorporate this fiduciary standard of care."
In his letter Wednesday, Mr. Patronis did not mention whether all managers that integrate ESG factors into their investment decisions should also be terminated by the State Board of Administration.
BlackRock officials could not be immediately reached for further comment.
