Republican lawmakers and state officials are stepping up pressure on financial firms over what they say are “woke” policies that discriminate against fossil fuels, but their withdrawals from the world’s largest asset manager aren’t yet making much of a mark – at least on the bottom line. "I cannot support an institution that would deny our state the benefit of one of its most robust assets," Louisiana Treasurer John Schroeder said last month in announcing that his state would pull $794 million from BlackRock Inc. Louisiana was following the lead of West Virginia, Kentucky, Oklahoma and Texas, which passed laws this year requiring divestments from firms they accuse of boycotting fossil fuels. South Carolina, Utah, Arkansas and Missouri are also divesting from BlackRock because of decisions by their state treasurers, to the tune of a little over $1 billion, and other Republican legislatures are expected to follow suit. For all the ink that's been spilled over the moves, they're not hugely weighing on the company, analysts say. “It is a bit of a headwind obviously to assets,” said Stephen Biggar, who follows BlackRock as director of financial institutions research at Argus Research. “I wouldn’t say it’s a big dent.” BlackRock tends to take in billions of dollars in net inflows each quarter, which in the recent quarter alone appears to have more than compensated for the money that some conservative states are divesting. In the most recent quarter, BlackRock raked in $16.91 billion in net flows and still had assets under management of $7.96 trillion, even amid the market downturn. States’ financiers have severed relationships with the Wall Street firm to send a message to BlackRock that they don’t agree with the asset manager’s stance on environmental, social and governance issues. BlackRock and other large firms could be in for a bruising 2023 at the hands of the political party once seen as an ally to big financial institutions: Republicans are plotting additional divestments at the state treasurer level and heavy oversight of Wall Street’s ESG push, including congressional oversight of the federal government’s focus on climate risk. All told, though, the money is so far a drop in the bucket for BlackRock. Plus, a Democratic-led coalition of state treasurers opposing the ESG backlash account for about $2.5 trillion in assets . Argus Research’s Biggar said he thinks states taking their money away from the asset manager has “probably hit its boiling point.” He thinks BlackRock Chief Executive Larry Fink’s letters mentioning ESG might also “soften,” he said, but the company is still going to keep its positioning on the subject. “They’re monitoring but they don’t plan to change any stances,” Biggar said.
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