The Missouri State Employees' Retirement System (MOSERS) sold off $500 million in pension funds from an investment manager that Treasurer Scott Fitzpatrick accused of "advancing a woke political agenda."
The MOSERS board in June voted to remove proxy voting powers from investment managers, with Fitzpatrick pointing to BlackRock, a New York-based multinational investment firm that held most of MOSERS' equity exposure. Proxy voting allows company shareholders to weigh in on issues regarding public companies and to vote in board member elections. This power had been allowed to the asset management firms that hold stock in businesses on MOSERS' behalf, according to the Treasurer's Office. Those firms were expected to use their votes to maximize the value for the retirement system.
The firm is also a large shareholder in Exxon Mobil and recently used its proxy votes to back climate activists in their bid for three seats on Exxon's board.
Fitzpatrick, a Republican running for state auditor, told the News Tribune at the time those new members would likely advocate for Exxon to decrease its oil and gas production, and noted the potential financial impact on the gas juggernaut and consumers.
According to a news release from Fitzpatrick's office, BlackRock refused to comply with the board's vote to prohibit it from proxy voting, resulting in MOSERS' sale of its equity holdings with the firm.
"This is the right thing to do for Missouri state employees who rely on the assets managed by MOSERS for their retirement. Fiduciary duty must remain the top priority for investment managers -- a duty some of them have abdicated in favor of forcing a left-wing social and political agenda that has failed to succeed legislatively, on publicly traded companies," Fitzpatrick said in a statement.
"MOSERS has an obligation to manage its assets in a way that prioritizes providing maximum possible returns for retirees and taxpayers," he continued. "We should not allow asset managers such as BlackRock, who have demonstrated that they will prioritize advancing a woke political agenda above the financial interests of their customers, to continue speaking on behalf of the state of Missouri."
Missouri is the latest state to make a move against the firm, with Louisiana announcing plans to divest its BlackRock assets earlier this month.
A statement from a BlackRock spokesperson to the News Tribune pointed to its recently-created Vote Choice initiative, which it says allowed clients -- including public groups like MOSERS -- to participate in voting decisions and make their own voices heard.
"BlackRock has built its business on providing our clients choice to reflect their unique goals and preferences. While the actions of some elected officials have attracted media headlines, they do not reflect the totality of our clients' investment decisions," the firm's statement read. "We remain committed to offering our clients choice and delivering them the best financial outcomes consistent with their preferences.
"The foundation of BlackRock is providing choice to our clients. This extends to proxy voting where we believe every investor should have easy and efficient options to participate if they choose. We launched BlackRock Voting Choice 12 months ago and today it represents the broadest program on the market, available to all of U.S. public pension plans."
Missouri Attorney General Eric Schmitt also joined a coalition of Republican state attorneys general on a letter accusing it of using public funds for social advocacy in August.
The board is made up of lawmakers, financial professionals, gubernatorial appointees and the commissioner of the Office of Administration alongside the state treasurer.
MOSERS handles retirement, long-term disability insurance and life insurance for the state's workforce. MOSERS had nearly 46,000 active members and 67,808 inactive members in 2020, according to the latest annual report.
The state is also Jefferson City's largest employer, with around 14,000 state employees calling the area home per data from the Jefferson City Area Chamber of Commerce.