Arizona is forging ahead with its plan to divest its pension funds from BlackRock due to concerns over the massive investment firm’s push for environmental, social, and governance (ESG) policies that have led other states to take similar actions.

Arizona Treasurer Kimberly Yee said in a statement released Thursday that the state treasury’s Investment Risk Management Committee (IRMC) began to assess the relationship between the state’s pension fund and BlackRock in late 2021. 

“Part of the review by IRMC involved reading the annual letters by CEO Larry Fink, which in recent years, began dictating to businesses in the United States to follow his personal political beliefs,” Yee wrote. “In short, BlackRock moved from a traditional asset manager to a political action committee. Our internal investment team believed this moved the firm away from its fiduciary duty in general as an asset manager.”

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In response to those findings, Yee noted that Arizona began to divest over $543 million from BlackRock money market funds in February 2022 and “reduced our direct exposure to BlackRock by 97%” over the course of the year. Yee added that Arizona “will continue to reduce our remaining exposure in BlackRock over time in a phased in approach that takes into consideration safe and prudent investment strategy that protects the taxpayers.”

Although the state will continue to hold some BlackRock stock through shares in a passive index of the top 1,500 American corporations, Arizona will have “minimal direct exposure” to BlackRock amounting to “less than 1 tenth of one percent of our total assets under management” as of the end of November. Yee said that Arizona intends to vote its shares in the index in an effort to “change the political activism of BlackRock.”

“We will continue to fight back against the dangerous path of companies pushing their social issues and wokeism inside of the investment space and return to traditional money management that puts the people first,” Yee’s statement concluded.

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BlackRock is currently the world’s largest asset manager with roughly $8 trillion under management and is one of several major financial institutions that have led the charge for the adoption of ESG standards in recent years. The ESG movement broadly seeks to promote a green energy transition and left-wing social priorities through the financial sector. Critics of the ESG movement argue that its focus on green investments runs contrary to the fiduciary responsibility of firms to pursue the best possible returns for investors.

BlackRock pushed back against criticisms of its investment strategy in a statement to Fox Business which read in part: “Over the past year, BlackRock has been subject to campaigns suggesting we are either ‘too progressive’ or ‘too conservative’ in how we manage our clients’ money. We are neither. We are a fiduciary. We put our clients’ interests first and deliver the investment choices and performance they need. We will not let these campaigns sway us from delivering for our clients.”

The statement added, “In the U.S. alone, clients awarded BlackRock $84 billion of long-term net inflows in the third quarter and $275 billion over the last twelve months.”

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The ESG policies advanced by BlackRock have drawn the ire of some investors and state policymakers alike. 

Florida’s chief financial officer announced recently that the state’s treasury is taking action to remove about $2 billion in assets from BlackRock’s stewardship before the end of this year. In October, Louisiana and Missouri announced they would reallocate state pension funds away from BlackRock, which amounted to roughly $1.3 billion in combined assets. Taken together with Arizona’s divestment, roughly $3.8 billion in state pension funds have been divested from BlackRock by those four states alone.

Additionally, North Carolina’s state treasurer has called for BlackRock CEO Larry Fink’s resignation and the Texas legislature has subpoenaed BlackRock for financial documents.

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The investment firm has also taken heat from activists who argue BlackRock isn’t doing enough to follow through with its ESG commitments. New York City Comptroller Brad Lander wrote to Fink in September citing an “alarming” contradiction between the company’s words and its deeds. Lander wrote, “BlackRock cannot simultaneously declare that climate risk is a systemic financial risk and argue that BlackRock has no role in mitigating the risks that climate change poses to its investments by supporting decarbonization in the real economy.”

BlackRock has insisted that its “role in the transition is as a fiduciary to our clients,” and “to help them navigate investment risks and opportunities, not to engineer a specific decarbonization outcome in the real economy.”

Fox Business’ Breck Dumas contributed to this story.