Indiana to Replace BlackRock in Pension Funds Due to ESG Investing Policies

The Indiana Public Retirement System (INPRS) voted to replace BlackRock as a manager in its portfolio, due to the investment giant’s alleged use of ESG investment policies and its engagement using “an ESG focused agenda.”

In a press release from Indiana State Treasurer Daniel Elliott, who also serves as a member of the INPRS Board of Trustees, Elliott said lauded the board’s decision to remove BlackRock, describing the firm as an “ESG violator.”

Elliott said:

“Today, I and other INPRS board members voted to put Hoosier public servants first by rejecting BlackRock and woke corporate policies. As Treasurer of State, I led the charge against ESG and other non-fiduciary policies that harm workers force that put Hoosier public employee pensions at risk.”

The announcement is the latest in a growing series of in an ongoing anti-ESG movement by Republican politicians in the U.S., with BlackRock, as the largest global investment management company, and a leading voice in the investment community on climate and energy transition-related investment themes, often in the spotlight. Most recently, BlackRock, alongside its peers Vanguard and State Street was the target of a multistate lawsuit, with Indiana as a participant, accusing the asset managers of using their positions in climate-focused investment initiatives to manipulate coal markets and drive up the cost of energy.

BlackRock runs a passively managed international government bond index mandate for INPRS, with assets reportedly of nearly $1 billion.

The vote follows a report by Elliott in June 2024, which found that BlackRock “has engaged in an ESG commitment,” citing the asset managers participation in the Net Zero Asset Management initiative (NZAM), and finding that its “ESG commitment with respect to INPRS assets” is made “for a nonfinancial purpose in furtherance of social and ideological interests.” BlackRock’s response, included in the report, noted that its mandate to run a benchmark index mandate for INPRS, “does not have an ESG component or screen.” Indiana passed a bill in 2023, prohibiting the use of ESG factors in investment decisions for the public retirement system.

In its vote, the INPRS board affirmed that other comparable asset managers exist as an alternative to BlackRock to manage the Global Inflation-Linked Bonds portfolio, and mandated INPRS to select a new asset manager for the portfolio.

Notably, BlackRock has scaled back its participation in sustainability-focused investment sector initiatives, including recently shifting its participation in engagement-focused coalition Climate Action 100+ to its international unit, citing a new strategy by CA100+ that would require signatories to commit to use client assets to pursue emissions reductions in portfolio companies. In a letter to CA100+ published on the asset manager’s website, BlackRock said that “the money BlackRock manages is not our own—it belongs to our clients—and BlackRock is committed to providing clients around the world with choices to support their unique and varied investment objectives.” BlackRock’s website also carries a ‘2030 net zero statement,’ which states that “our role is to help them navigate investment risks and opportunities, not to engineer a specific decarbonization outcome in the real economy.”

In a statement released following the vote, State Comptroller Elise Nieshalla, also a member of the INPRS board, said:

“I do commend BlackRock’s recent action to discontinue its affiliation with Climate Action 100+, but more needs to be done including ending its support of Net Zero and similar initiatives to demonstrate a refocused commitment of prioritizing beneficiaries over a political agenda.”