INDIANAPOLIS (WISH) — State Treasurer Daniel Elliott’s office announced Friday that Indiana is reviewing its investment in BlackRock Inc. because of the company’s environmental, social and governance practices.
The announcement marks the first time the Treasury Department has taken action against an investment company since a state law was passed in 2023 that bars state retirement systems from making environmental, social and governance (ESG) commitments in their investments. Treasury Department officials said BlackRock has been placed on an ESG watch list, which means the company’s investments will be automatically reviewed for 180 days. The Indiana Public Employees’ Retirement System is required to investigate BlackRock’s investments and submit a report to the INPRS board to determine whether BlackRock is in fact making ESG investments.
ESG investing, which involves making investments based on their potential impact on the environment and people, has become a favorite target of Republican lawmakers across the country. Indiana is one of 14 states that have enacted legislation in 2023 that will ban ESG investing by state retirement systems, according to the Pew Charitable Trusts.
A Treasury Department official told News 8 that the move doesn’t automatically mean Indiana will divest from BlackRock. Indiana’s investment in BlackRock will continue if state investors can’t find an alternative with a rate of return equal to or better than BlackRock’s. The final decision on whether to continue investing in BlackRock will rest with the INPRS Board of Directors.
In a statement to News 8, BlackRock executives said they have invested about $95 billion in the Indiana Public Employees Retirement System. They also pointed to studies showing anti-ESG laws have had a negative impact on states that have enacted them. Oklahoma’s law, passed in 2022, is currently on hold pending court review. A study by the Oklahoma Rural Association estimated that the ESG boycott in the state has cost the state $185 million so far.
“Contrary to the Treasurer’s assertions, BlackRock has been solely focused on driving INPRS’s performance in line with INPRS’s objectives. Our business is based on a fiduciary duty to provide choice to our clients and we follow our clients’ instructions,” a BlackRock official said.
