Nebraska Investment Council Moves Funds from BlackRock to Northern Trust
Nebraska has joined a growing list of states withdrawing funds from BlackRock, the world’s largest asset manager. The decision comes as BlackRock awaits the SEC’s ruling on a Bitcoin exchange-traded fund (ETF), with the review period extended until October. The Nebraska Investment Council unanimously voted to transfer half of its $7.3 billion in passive investments to Northern Trust due to concerns over BlackRock’s focus on environmental, social, and governance (ESG) standards. The other half will remain with BlackRock. However, BlackRock will continue to manage the state’s $40 billion in active investments, including pension funds and college saving plans. There is disagreement over the reasons for the change, with some claiming it is unrelated to ESG and instead due to Northern Trust’s superior services.
Political Pressure Mounts on ESG Standards
Nebraska is not the first state to express concerns about BlackRock’s emphasis on ESG. Politicians in Kentucky, Texas, Florida, West Virginia, and North Carolina have also raised issues. There is also growing political pressure in Washington, with Rep. Bill Huizenga sending letters to top asset managers, including BlackRock, regarding their balance between ESG initiatives and investor returns. In response to criticism, BlackRock has softened its stance on environmental and social policy, endorsing only 7% of environmental and social shareholder proposals in its recent report. The asset manager has also faced criticism for its investment ties to China, having directed over $429 million to Chinese firms across five funds, raising concerns about global security threats.
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