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Wednesday, October 19, 2022
Coal state taking down BlackRock
There is irony in BlackRock reducing its investments in coal, a mineral that some of us mistakenly call a black rock. There also is blowback. West Virginia and its buddy states are fighting back.It all began with a tweet in January by state Treasurer Riley Moore.
The announcement said, “The decision was based on recent reports that BlackRock has urged companies to embrace net zero investment strategies that would harm the coal, oil and natural gas industries, while increasing investments in Chinese companies that subvert national interests and damage West Virginia’s manufacturing base and job market.”
Besides coal, West Virginia produces oil and natural gas.
Moore said, “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 time, BlackRock was a $10 trillion investment company. West Virginia’s holdings were pathetically small. $20 million, according to the New York Times. Moore was the ant trying to move that rubber tree plant. But he had high hopes. Besides, what else could he do?
In 2020, the $10 trillion company told shareholders, “Thermal coal is significantly carbon intensive, becoming less and less economically viable, and highly exposed to regulation because of its environmental impacts. With the acceleration of the global energy transition, we do not believe that the long-term economic or investment rationale justifies continued investment in this sector.”
A Republican Legislature gave state officials the power to retaliate against these bullies.
NYT said, “While the coal business is waning, it is still big business in West Virginia. Taxes from coal and fossil fuel industries are the third-largest source of funds for West Virginia, according to the state. In the most recent fiscal year, the state collected some $769 million in severance taxes from coal and other fossil fuel companies, representing 13% of the $5.89 billion in funds collected by the state.”
So BlackRock is picking on one of the poorest states in the nation. Moore and the rest of state government have no choice but to fight back against BlackRock, as well as U.S. Bancorp, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo, 6 banks that are cutting coal companies off.
Other states are following West Virginia’s lead in divesting themselves from BlackRock.
Fox reported, “Missouri has pulled $500 million in state pension funds managed by New York-based financial institution BlackRock over the company’s environmental and social priorities.
“Missouri State Treasurer Scott Fitzpatrick announced Tuesday morning in a statement first provided to Fox Business that the Missouri State Employees’ Retirement System, of which he is a member, sold all public equities managed by BlackRock. With the announcement, Missouri joins a growing list of Republican-led states who have quit BlackRock and other banks over their environmental, social and governance (ESG) initiatives.”
$3 billion is nothing. It is 3% of 1% of $10 trillion.
It is 30 cents interest on a thousand bucks.
But ticking off the government is bad for business.
Stacey Lennox reported, “Larry Fink is having a bad year. Some estimates place investments withdrawn from BlackRock, the firm where he is CEO, at nearly $3 billion just from states pulling treasury funds due to Fink’s public political agenda. In the second quarter of 2022, BlackRock exceeded average market losses, with assets under management falling 22% to $8.5 trillion. Third-quarter assets under management fell another 15%, with adjusted earnings down 12.8% and revenue falling 15%.”
Looks like that rubber tree plant just moved.
The Epoch Times reported, “BlackRock’s focus on the latest Wall Street craze—environmental, social, and governance investing—has turned into a risky affair for the world’s largest asset manager, a UBS analyst recently stated.
“Brennan Hawken, an analyst at the bank, downgraded the stock of BlackRock, Inc. from Buy to Neutral and slashed the stock price target from $700 to $585 over growing pushback to its ESG efforts.”
I love it.
In response, the company tweeted, “BlackRock has built its business on providing our clients choice which align with their unique goals and preferences. While the actions of some elected officials have attracted media headlines, they do not reflect the totality of our clients’ investment decisions.
“For example, clients have awarded BlackRock $248B of net new long-term assets this year, including $84B in the third quarter in the U.S. alone.
“We remain committed to offering our clients choice and helping them achieve financial outcomes consistent with their investment goals. This extends to proxy voting where we believe every investor should have easy and efficient options to participate if they choose.
“We launched BlackRock Voting Choice twelve months ago and today it represents one of the broadest programs on the market, available to all U.S. public pension plans.”
Translation: We’re bigger than you.
The rubber tree has spoken!
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Posted by Don Surber at Wednesday, October 19, 2022