Larry Fink said stakeholder capitalism is not ‘woke,’ but Florida wants to ding BlackRock anyway

Florida is going for broke in its battle against all things “woke.”

The state’s treasury department is divesting $2 billion in assets currently managed by BlackRock in response to the asset management firm’s environmental, social, and corporate governance (ESG) policies, according to Jimmy Patronis, Florida’s chief financial officer.

In a statement Thursday, Patronis cited Larry Fink’s annual letter to CEOs, in which the BlackRock chief vigorously defended “stakeholder capitalism,” or the idea that companies can create more value when they think and act beyond their shareholders. “Stakeholder capitalism is not about politics,” Fink had written. “It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”

Patronis appears to disagree. “To meet this end, [BlackRock] has leaned heavily into Environmental, Social, and Governance standards—known as ESG—to help police who should, and who should not, gain access to capital,” Patronis wrote. “Using our cash, however, to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for. It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do. Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns.”

Patronis concluded by saying that “the Florida Treasury will be taking its business elsewhere.”

Reached for comment, BlackRock appeared blindsided by the move. ““As a fiduciary, everything we do is with the sole goal of driving returns for our clients,” a spokesperson said in a statement to Fast Company. “We are surprised by the Florida CFO’s decision, given the strong returns BlackRock has delivered to Florida taxpayers over the last five years. Neither the CFO nor his staff have raised any performance concerns. We are disturbed by the emerging trend of political initiatives like this that sacrifice access to high-quality investments and thereby jeopardize returns, which will ultimately hurt Florida’s citizens. Fiduciaries should always value performance over politics.”

Florida’s move is the latest in a series of measures that the state—and many Republican legislators in Florida and elsewhere—have taken against so-called woke ideology and woke capitalism more specifically. As for what “woke” actually means? The term generally refers to being aware of past and present racism, systemic oppression, and inequalities in the United States; but in recent years, it has more or less turned into a catchall term for almost any (seemingly) left-leaning policy or idea—and in the minds of critics, that appears to include ESG investing and policies.

To that point, Rick Scott, a U.S. Senator from Florida, said, “I don’t know what the definition of woke so much is,” when asked earlier this year. Even if woke is hard to define, it hasn’t stopped many legislators, including those in power in Florida, from hammering it at every opportunity. Previous examples include the state’s “Don’t Say Gay” legislation, its “Stop Woke Act,” and a bill that targeted Disney specifically for public posturing against some of its anti-woke bills.

As such, Florida has become something of a heavyweight in terms of fighting “wokeness,” even as some major brands and corporations have chosen to lean into it. Again, the state’s $2 billion divestment from BlackRock is further proof that its leaders aren’t fooling around when it comes to using its legal and economic weight to push back.

The Sunshine State is not alone, however. Earlier this year, Republican-controlled Texas said it would ban a number of ESG funds, including those from BlackRock.

ESG policies have become increasingly popular in recent years, as well as increasingly divisive. While the basic motive of an ESG framework is to serve consumers, workers, and the planet at large (perhaps, even, at the expense of increasing share values), it’s made for fertile ground for culture wars, as evidenced by Florida’s latest move. 

Nevertheless, ESG investing is growing in popularity, even among institutions. ESG-focused institutional investments are expected to grow 84% over the next few years to nearly $34 trillion, according to data from PwC.