Republican state leaders are on the warpath against BlackRock, the largest financial asset manager in the nation.

The company’s sin? Saying climate change is a long-term threat, and that the company will pursue investments that promote a reduction in emissions.

In January, West Virginia declared it was barring the company from managing its state pension funds. Texas passed legislation in February prohibiting any firm divesting from fossil fuels from managing state assets. In March, the Arkansas state treasurer withdrew $125 million from money market accounts managed by BlackRock.

Yet BlackRock also pledged in a February letter to Texas officials, “We will continue to invest in and support fossil fuel companies.”

As a company holding investments in nearly every major firm in the nation, BlackRock’s change of tune did not amount to a change in policy – since the firm hadn’t yet divested from anything – but it still sounded like a defeat to progressives. But in reality, the reason red states are passing such legislation is because they’re losing: Fossil fuel firms are facing disinvestment campaigns nationwide. Thanks to this pressure, BlackRock and the two other largest managers of retirement funds, Vanguard and State Street, have pledged to use their voting power in corporate governance to support a transition to a net-zero-emissions economy over time.

The problem for the fossil fuel industry is while pro-fossil-fuel red-state officials tout the $600 billion in pension and other financial assets they oversee, that’s a tiny fraction of the $5.6 trillion in public pension funds and related assets in 6,000 separate public-sector retirement systems across the nation.

There is now a network of state-based activists who recognize they can exercise real power over pension assets controlled by states – and they don’t need the permission of Joe Manchin to use that power.

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“[New York City] was the first big U.S. pension fund to move,” says divestment organizer Pete Sikora, “and it is at the heart of global capital: important in size and in a city where fossil fuel is funded.”

Because red states have never provided decent pensions for their public employees, “blue-state pension funds are just far bigger pools of capital,” Sikora says, and bring more firepower to financial fights.

BlackRock, founded in 1988, now manages $10 trillion in assets; it could buy Apple, Microsoft, Google, and Amazon outright – and still have money left to buy Tesla. Along with other asset managers Vanguard and State Street, those three firms control 25 percent of shares voting in corporate director elections at S&P 500 companies.

“BlackRock is one of the few transnational government-level entities that can affect geological history,” Sikora says.

Part of what’s needed is to have more progressives recognize the power of state-controlled pensions. “Climate activists put an enormous effort into moving U.S. government action and policy,” Sikora says, “but for the same energy, you can put a lot of heat on Wall Street.”

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