Sometimes politics mixes with business like oil and water. Republican states are making that clear by defending their oil and energy sectors against investment banks who have openly taken a stance against fossil fuels. Louisiana is the latest state to do so by backing out of their business dealings with BlackRock. BlackRock is an investment company committed to policies limiting commercial engagement with the fossil fuel industry. But those policies would in turn not benefit state economies that rely on their energy sector like Louisiana.
Louisiana drills the second most oil and the third most natural gas in the country, according to the Energy Information Administration. State Treasurer John Schroder explained why they are pulling funds from BlackRock in a statement to the investment company.
“Your blatantly anti-fossil fuel policies would destroy Louisiana’s economy,” Schroder wrote. “I cannot support an institution that would deny our state the benefit of one of its most robust assets.”
Louisiana will divest nearly $800 million from the bank’s money market funds, mutual funds or exchange-traded funds. It will liquidate all assets with BlackRock over a three month period.
In response to Louisiana’s letter, BlackRock argued against the idea that it dictated emissions targets for its portfolio companies. “We are disturbed by the emerging trend of political initiatives that sacrifice pension plans’ access to high-quality investments – and thereby jeopardize pensioners’ financial returns,” BlackRock wrote. It also cited $100 billion worth of investments in Texas energy companies as proof that it doesn’t boycott fossil fuels.
Louisiana isn’t the first state to make the move to leave Blackrock, following in the footsteps of West Virginia who pulled their assets in July. At least 10 other republican states have said they are considering similar action or will take action against banks that boycott energy companies.
“We’ve really seen, frankly, a weaponization of capital by some of the largest banks and fund managers in the world,” Derek Kreifels, the CEO of the State Financial Officers Foundation (SFOF), told FOX Business. “If you want to make social change in this country, we have a democratic process that you should utilize to get that done.”
