Florida pulls $2 billion in retirement funds from BlackRock in anti-ESG stance

Yahoo Finance political columnist Rick Newman explains how Florida yanked $2 billion from BlackRock as part of Governor Ron DeSantis's anti-ESG stance.

Video transcript

DAVE BRIGGS: The war against woke capitalism continues to rage. The latest battle between Florida Governor and likely Republican presidential candidate Ron DeSantis and BlackRock CEO Larry Fink. The prize, a $2 billion investment. Senior columnist Rick Newman here with how this fight has ended for now. Hey, Rick. What's the latest from DeSantis?

RICK NEWMAN: Well, Florida says it's going to pull $2 billion in assets. And this is money that's in retirement funds. And they have to find somebody to invest that money. So that money is at BlackRock, the giant investing firm. And they said they're going to take that out because they don't agree with BlackRock's ESG focus, the environmental, social, and governmental guidance that BlackRock operates by. But it's unclear what they're going to do with that money.

I mean, are they going to look around for some other finance firm, or investing firm, that has a invest in the sin industry or something like that? You're only going to invest in oil companies, gun manufacturers, and booze, and cigarette companies? I'm not sure I get where this is going. And Florida is not, by any means, pulling all of its money out. That $2 billion is a small part of all the funds that Florida has in its retirement savings account. And it's not a huge hit for BlackRock either.

I did the math on this. BlackRock has $10 trillion in assets under management. And Florida is taking out two billion. So that adds up to about 0.2% of BlackRock assets that they're going to lose on this. But we're going to hear a lot more about this. But because Republican thinks-- Republicans think they can gain political leverage by going after big companies that are a little too socially correct for them.

DAVE BRIGGS: And Larry Fink had some headlines. At the DealBook "New York Times", somebody yesterday actually believed we're going to need hydrocarbons for 70 years. He also said, quote, "I believe stakeholder capitalism is not political, not woke. It is capitalism." We'll see how that resonates. Rick, do you think other states, Republican led obviously, will follow here?

RICK NEWMAN: Yeah, there are a couple of others that have already done this. I think Louisiana has done it. I think you'll find some other states that have done this. But I think it's just going to add up to small potatoes because I don't really see what alternatives anybody who has this kind of money to invest really has. And BlackRock says, look. You can't say you want to take your money away from us because our returns are poor.

Our returns are excellent. And there is a case to be made that applying a certain amount of ESG focus actually improves returns. Now there's a lot of debate on that. And it's going to go on. But there was an effort to capitalize on this. There was a bank in Texas that tried to set up and carve out some space here and say, we are the anti-woke lender. You can bank with us if you don't like the way big banks operate. And they went bust about three or four weeks ago. So I'm not sure how solid that market is.

DAVE BRIGGS: Yeah, this is right up Governor Abbott's ally indeed. Senior columnist Rick Newman here with that. Good stuff, my friend. Thank you.