West Virginia once had approximately $2.1 billion of its state pension funds managed by BlackRock, Inc., but it recently decided to leave that money management firm because the state is at odds with BlackRock’s investment strategy.
The state used to rank 10th among all states in terms of how much money it had placed under BlackRock’s control, Mountain State Times reported.
That came to a screeching halt in January, after a consumer advocacy group alerted several states, West Virginia among them, of BlackRock’s investment strategy that focuses on net-zero energy.
Consumer's Research Executive Director Will Hild said in an interview, later posted on YouTube, that Larry Fink, the CEO of BlackRock, is taking actions that "are betraying the American consumer." When it comes to Fink and BlackRock pushing Americans toward green energy, Hild noted that he's employing a double standard. "He's not doing anything like that to the Chinese Communist Party. They're invested in PetroChina there and don't mess with any of their assets," Hild said.
The group sent letters to the governors of the 10 states that had the most invested with BlackRock, expounding on the concerns with the investment firm, West Virginia Business Daily reported.
Soon thereafter, SWFI published an article saying that Riley Moore, West Virginia state treasurer, declared that the Board of Treasury Investments (BTI) would no longer use BlackRock. The BTI manages the state's $8 billion in operating funds.
Recent reports that BlackRock was urging companies to embrace "net zero" investments and investment strategies were not in line with West Virginia’s goals, Moore said. That strategy would harm the coal, oil, and natural gas industries, on which West Virginia heavily relies. The decision was also motivated by BlackRock's investments in Chinese firms that pose investment risks and are not in the interests of the United States.
BlackRock CEO Fink sent a letter to the companies BlackRock invested in, telling them that businesses that are not anticipating a carbon-free future risk being left behind, and that it was a focus of BlackRock to help lead the transition to net-zero energy. The letter also said that "climate rise is investment risk" and BlackRock would be "exiting investments that present a high sustainability-related risk," while "launching new investment products that screen fossil fuels." BlackRock was founded in 1988 and manages $10 trillion.
The objection to BlackRock stems partly from West Virginia’s reliance on fossil fuels. According to data estimated from 2019 from the U.S. Energy Information Administration (EIA), West Virginia's end-use consumption by source, excluding losses, breaks down as follows: 4.7% from coal, 37.2% from natural gas, 36.2% from petroleum, 2.9% from renewable energy, and 19% from electricity.
Electric power sector consumption by source is dominated by coal, which accounts for 93.2% of consumption. The remainder is made up of natural gas (2.8%), petroleum (0.2%), and renewable energy (3.9%), EIA data show.
West Virginia produces the fifth most power out of any state, as of 2019. In 2020, the state was the second-largest coal producer, behind Wyoming, accounting for 13% of total U.S. production. In 2020, coal-fired electricity's share fell to 88% from 93.2% a year earlier, the EIA reported.
West Virginia was the fifth-largest natural gas producer in the United States in 2020, increasing production tenfold from 2010, according to EIA figures.
Moore also noted that BlackRock had been increasingly investing in Chinese companies that engaged in conduct that ran counter to the interests of the United States, and would damage the manufacturing industry and job market in West Virginia. He highlighted significant financial risks associated with firms that invest heavily in China, “due to that country’s lack of free-market protections, intellectual property rights, and outright government interference in markets and business activities,” according to Mountain State Times.