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NC state treasurer calls for asset management firm’s CEO to resign, citing “Wacktivism”

Dale Folwell
Cotto
/
Public Domain

North Carolina’s state treasurer on Friday called on an asset management firm’s CEO to resign or by removed, citing “Wacktivism” and loss of confidence in his leadership because of his focus on Environmental, Social and Corporate Governance initiatives.

State Treasurer Dale Folwell called BlackRock the world’s largest asset manager, with approximately $9.5 trillion under management, and said CEO Larry Fink has been at the forefront of using its market power to coerce the world’s companies to transition to carbon “net-zero” by 2050.

“As keeper of the public purse my duty is to manage our investments to ensure that the best interests of those that teach, protect and serve, as well as of our retirees, are always paramount,” Folwell said.

The North Carolina Retirement Systems have about $14 billion invested through BlackRock in various active but mostly passive funds at the lowest possible investment fees, in addition to around $55 million passively invested in BlackRock stocks or bonds.

“Unfortunately, Mr. Fink’s political agenda has gotten in the way of his same fiduciary duty. A focus on ESG is not a focus on returns, and potentially could force us to violate our own fiduciary duty of loyalty,” Follwell added, “Ultimately, Mr. Fink’s continued ideological pressure could result in using ESG scores against states and local governments, lowering their credit ratings and thus driving up their cost of borrowing at taxpayers’ expense. This not only concerns me as the state treasurer and ‘keeper of the public purse,’ but as Chair of the N.C. State Banking Commission and the Local Government Commission. “

The treasurer said BlackRock and Fink have been using the financial power of their clients to force the global warming agenda by using their proxy voting authority to push companies to “net zero,” often in conflict with their fiduciary responsibilities.

For example, in 2020 Folwell said BlackRock used its clients’ proxy votes to vote against two management-supported board members of ExxonMobil – the fourth-largest oil company in the world – because of “insignificant progress” toward ESG goals moving the company away from oil and toward renewable energy.

ExxonMobil stock rose 60% in the 12 months since the board member election because of a rise in the demand for oil and subsequent price increases. Currently, 19 of the 20 best-performing companies in the S&P 500 are fossil fuel producers or connected to the industry.

Folwell called it ironic that the largest electric car company in the world, Tesla, Inc., was removed from the S&P 500 ESG Index while ExxonMobil remained and is rated among the Top 10 best in the world for ESG, according to S&P Global, the analytics firm that produces the ratings.

Tesla co-founder and CEO Elon Musk referred to the action as “wacktivism” whose proponents are “wacktivists.”

After receiving some backlash, last year BlackRock created a proxy voting system called Voting Choice. The program allows investors in certain pooled vehicles to have some degree of control over their voting. Treasurer Folwell recently signed an agreement that enables NCRS to vote its shares managed by BlackRock.

“The existence of the proxy voting program does not mitigate the need for a new direction at BlackRock,” said Treasurer Folwell. “There is no blue money or red money at the treasurer’s office, only green. As the fiduciary for the North Carolina Retirement Systems, we seek not to be political, but mathematical. BlackRock needs to be totally focused on returns for their clients, not on the political effort to ‘transform’ the economy to their vision of carbon zero. Fossil fuels will be the engine that drives the world’s economy for the foreseeable future. The only way that I can see BlackRock refocusing on their fiduciary duty to their clients is for a change at the top.”

Treasurer Folwell added that he agrees with Charlie Munger, vice chairman of Berkshire Hathaway Inc., that we do not need “emperors” voting shares in index funds based on their social agendas.