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Key Points:
- BlackRock retains $7.3 billion investment contract with Oklahoma Public Employees Retirement System (OPERS).
- Decision comes after Oklahoma enacted a law pausing consideration of environmental, social, and governance (ESG) factors in state investment decisions.
- BlackRock maintains its commitment to ESG investing but will comply with relevant regulations.
The Oklahoma Public Employees Retirement System (OPERS) has decided to extend its investment contracts with BlackRock Inc., overseeing $7.3 billion in assets. This decision comes on the heels of a state district court judge pausing the enforcement of Oklahoma’s anti-ESG law, which mandates divestment from firms allegedly boycotting the fossil fuel industry.
Joe Fox, executive director of OPERS, confirmed that the contract extensions were a carryover from an April meeting due to BlackRock being on the state’s restricted list. The law, known as the Energy Discrimination Elimination Act, prohibits state entities from contracting with companies engaging in energy boycotts.
This legal halt was prompted by a lawsuit from a retired public employee, leading to the temporary suspension of the law. The anti-ESG legislation has impacted BlackRock’s relationships with public pension clients across Republican-led states, which are significant investors.
Oklahoma’s House Bill 1026, signed into law in April 2024, prohibits state agencies from selecting investment firms that consider ESG factors alongside financial returns. This law has been met with criticism from ESG advocates who argue that it prioritizes short-term gains over long-term sustainability.
BlackRock, a vocal proponent of ESG investing, has acknowledged the Oklahoma law but maintains its commitment to the state pension fund. “We are committed to working with our clients to achieve their investment goals, and that includes complying with all applicable laws and regulations,” said BlackRock spokesperson Sarah McKinney. McKinney did not comment on whether BlackRock would challenge the Oklahoma law in court.
Some legal experts believe the Oklahoma law could face legal challenges. “This law raises serious questions about the fiduciary duty of state investment officials to act in the best interests of their beneficiaries,” said legal scholar David Jones. “ESG factors can be financially material, and excluding them from the investment decision-making process could be a violation of that duty.“
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Only time will tell how this situation will unfold. However, one thing is clear: the debate over ESG investing is likely to continue.