The Oklahoma Public Employees Retirement System (OPERS) has made a significant decision to extend its investment contracts with BlackRock Inc. This development is particularly noteworthy as it follows a judicial decision to temporarily halt the enforcement of Oklahoma’s anti-Environmental, Social, and Governance (ESG) law, which directly targets BlackRock. The extension of these contracts reflects the pension board's decision amidst ongoing legal and political challenges.
During a meeting held on Thursday, the pension board members unanimously agreed to extend the contracts with BlackRock, entrusting the firm with the management of investments totaling $7.3 billion. This decision was confirmed by Joe Fox, the executive director of OPERS, through an email. The extension marks a critical move for the pension system, ensuring continued management of a substantial portion of its investment portfolio by BlackRock.
BlackRock is one of the firms listed by Oklahoma’s Republican Treasurer, Todd Ross, as allegedly engaging in actions that "boycott" the fossil fuel industry. This list was created as part of the Energy Discrimination Elimination Act, a state law aimed at countering perceived discriminatory practices against the fossil fuel sector. The inclusion of BlackRock on this list has significant implications for its business operations within the state.
The Energy Discrimination Elimination Act stipulates that state agencies and political subdivisions, including cities, are prohibited from contracting with firms unless these firms can verify that they do not partake in energy boycotts. This legislation also mandates that state pensions must divest from any companies that appear on the restricted list. The law is a reflection of the state's strong stance against corporate policies perceived to be against the fossil fuel industry.
Earlier this month, the enforcement of this stringent law was paused by a state district court judge. This judicial intervention occurred in response to a lawsuit filed by a retired public employee who sought to temporarily block the legislation. As a result, the extensions of BlackRock's contracts, which had been deferred from an April pension board meeting due to the company’s listing on the restricted list, were subsequently reconsidered and approved by the board.
At this time, BlackRock has not issued an immediate comment on the recent decision to extend its contracts. The company’s silence leaves questions about its perspective on the ongoing legal and political challenges it faces in Oklahoma.
The implementation of anti-ESG laws in Republican-led states has significantly impacted BlackRock’s business relationships with public pension clients. These pension clients typically manage extensive investment portfolios worth billions of dollars on behalf of retirees. The restrictive laws have created hurdles for BlackRock, complicating its ability to maintain and secure new contracts with these public pension systems.
According to its 2023 financial report, OPERS oversees more than $11 billion in assets and serves a membership exceeding 72,000 individuals. The pension system’s investment strategy includes allocations to fixed-income assets and both international and domestic equity index funds. These funds are managed by BlackRock Institutional Trust Company, highlighting the firm's critical role in the management of OPERS's investment portfolio.
17.05.2024
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