Mississippi has joined the growing chorus of states calling on their public pension plans to divest from BlackRock funds and disavow ESG investment strategies.
In a letter to board members of the $29.4 billion Mississippi Public Employees' Retirement System, Jackson, on Nov. 14, Mississippi Treasurer David McRae lashed out at BlackRock as well as New York investment firms in general for adopting ESG strategies that he said jeopardize Mississippi's public employees.
"Many New York City asset managers have begun to offer ESG options, but BlackRock had adopted one of the most aggressive postures, weaponizing their clout and acting as a loyal soldier for the ESG cause rather than those to which they have fiduciary responsibility," Mr. McRae wrote in the letter.
Mr. McRae blasted BlackRock for "barring hundreds of individuals from joining corporate boards simply because of the candidate's climate change views," actions that he said ensured the likelihood of more companies being "led by environmental activists instead of business managers."
"Our job is to maximize financial returns for the more than 18,000 members of the Public Employees' Retirement System," he wrote to Mississippi PERS' board members.
Mr. McRae rebuked ESG policies as leading to "higher costs for consumers, a weaker Mississippi job market, increased inflation, and smaller investment returns."
"Regardless of your view on climate change, Mississippi's pension system is the wrong place to experiment with environment, social and governance strategies," Mr. McRae said.
He urged board members to divest from BlackRock and "formally prohibit the use of any consideration besides financial performance in its investment policy."
Ray Higgins, executive director of Mississippi PERS, said in a statement that "PERS will continue to act prudently in the best interests of the membership."
"We take seriously our fiduciary duty to manage the system's investments with the goal of maximizing returns at an appropriate level of risk," Mr. Higgins said. "As such, the board adheres to an existing policy that states investment decisions will only be made with loyalty and care in the best interest of the membership, and not based solely on political, environmental, social or governance considerations."
Mr. Higgins added that BlackRock is no longer a fund manager for PERS. However, he said that a very small percentage of the portfolio has exposure to BlackRock through some of its other fund managers that act as fiduciaries on its behalf while investing. Most of this exposure is in index funds, he said.
"I recognize Treasurer McRae's emphasis on this important topic, and I appreciate the leadership of all PERS board members," he said.
Mr. McRae's letter comes amid a growing backlash against BlackRock over its views on ESG investing. The $10.1 billion Missouri State Employees' Retirement System, Jefferson City, for example, recently withdrew $500 million from BlackRock funds, while Louisiana Treasurer John M. Schroder pulled $794 million. Texas, meanwhile, blacklisted BlackRock and nine other companies that it claims boycott energy companies, a move made to comply with a state law restricting state pension funds from investing in companies that divest from fossil fuels.
BlackRock did not have an immediate comment, but in a letter to the attorneys general of states that have attacked ESG investing, BlackRock denounced "political initiatives that sacrifice pension plans' access to high-quality investments and thereby jeopardize pensioners' financial returns."
"Open competition, the free flow of information, and freedom of opinions is core to the strength of U.S. capital markets," BlackRock wrote in the letter Sept. 6.
