Would someone like to tell these Republicans that Hermes has been a pioneer in shareholder engagement? I hope the pension beneficiaries challenge these decisions in court as there is no way the politicians have data to back up their claims.
BlackRock has lost more than $1bn in asset management business in US Republican states upset with the company’s green investing policies, withdrawals that have become a political problem but have not dented the company’s revenues.
In an interview with the Financial Times, South Carolina state treasurer Curtis Loftis said he would pull $200mn from BlackRock by the end of the year. Louisiana treasurer John Schroder said last week he was withdrawing $794mn from BlackRock. Utah’s treasurer Marlo Oaks said he liquidated $100mn in BlackRock funds, and Arkansas reportedly pulled $125mn this year.
As the global sustainable investing phenomenon has surged — it has increased by $1tn since 2020 — BlackRock jumped into the action. The company manages five of the top 20 US sustainable funds by assets, which is more than any other investment manager, according to Morningstar.
Beyond its fund offerings, chief executive Larry Fink has pushed companies to cut their carbon emissions and threatened to drop laggards from actively managed funds — policies that have put a target on BlackRock in Republican states.
Loftis said he previously rejected BlackRock as a manager for a $41bn fund his office oversaw because of concerns about its environmental, social and governance policies. Instead, he said he picked Federated Hermes to manage the fund.
Pittsburgh-based Federated Hermes also offers ESG funds and widely promotes its leadership in this space, especially since the acquisition of London-based Hermes in 2018. But Federated has been a top donor to the State Financial Officers Foundation, an organisation of Republican treasurers, including Loftis.
After pressure from foreign pension funds, Federated Hermes withdrew its SFOF sponsorship, the FT has previously reported. Now, the SFOF does not list any corporate sponsors on its website.US Republicans pull $1bn from BlackRock over ESG investing concerns | Financial Times