The Indiana Public Retirement System (INPRS) has made headlines by voting to replace BlackRock as a manager of its pension funds, citing concerns over the investment firm’s engagement in environmental, social, and governance (ESG) policies. State Treasurer Daniel Elliott, who is also a member of the INPRS Board of Trustees, characterized BlackRock as an “ESG violator” during a press release announcing the decision.
According to Elliott, the decision to remove BlackRock reflects a commitment to prioritize the interests of Indiana public servants and reject what he described as “woke corporate policies.” He emphasized the board’s intent to protect the pensions of Hoosier public employees from perceived risks associated with non-fiduciary ESG policies.
This move is part of a broader anti-ESG sentiment being voiced by Republican officials in the United States, with BlackRock often at the center of related controversies. Just recently, BlackRock, along with firms like Vanguard and State Street, faced a multi-state lawsuit for allegedly manipulating coal markets in pursuit of ESG-focused investment strategies.
Currently, BlackRock manages nearly $1 billion in a passively managed international government bond index for INPRS. Elliott’s criticisms were reinforced by a report he released earlier in 2024, which claimed that BlackRock was using its assets for “nonfinancial” purposes aligned with social and ideological interests, a charge BlackRock refuted by stating its management of INPRS’s funds does not involve an ESG screen.
Following the board’s vote, the INPRS affirmed that viable alternatives to BlackRock exist for managing its Global Inflation-Linked Bonds portfolio, prompting a search for a new asset manager. Notably, BlackRock has recently reduced its involvement in various sustainability-focused initiatives, including its role in the Climate Action 100+ coalition, citing a shift that requires members to utilize client assets for emissions reductions.
State Comptroller Elise Nieshalla echoed Elliott’s sentiments after the vote, praising BlackRock’s decision to withdraw from Climate Action 100+ but calling for a more substantial commitment to prioritize the needs of beneficiaries over political agendas.
This significant action by the INPRS highlights the ongoing debate surrounding ESG investing and its implications for public investment strategies.