INDIANAPOLIS (WISH) — State Treasurer Daniel Elliott’s office on Friday said it is reviewing Indiana’s investments in BlackRock Inc. over that firm’s environmental, social and governance practices.

The announcement marks the first time the treasurer’s office has pursued any action against an investment firm since the passage of a state law in 2023 that prohibits the state’s retirement system from making environmental, social and governance, or ESG, commitments in its investments. Officials with the treasurer’s office said BlackRock has been placed on an ESG watchlist, which triggers an automatic 180-day review of its investments. The Indiana Public Retirement System will have to research BlackRock’s investments and present a report to the INPRS board determining whether BlackRock has, in fact, engaged in ESG investing.

ESG investing involves making investments based on potential impact on the environment or people. It has become a favorite target of Republican lawmakers nationwide. According to The Pew Charitable Trusts, Indiana was one of 14 states to adopt laws banning ESG investing by its state retirement system during 2023.

Treasurer’s office officials told News 8 the move does not automatically mean Indiana will divest from BlackRock. If state investors are not able to find an alternative with a similar or better rate of return, the state’s investments in BlackRock will continue. Any final decisions on whether to continue investing in BlackRock will be up to the INPRS board.

In a statement to News 8, BlackRock officials said they have invested roughly $95 billion in Indiana’s public employee retirement system. They also pointed to studies that showed anti-ESG laws have had a negative impact in the states that have enacted them. Oklahoma’s law, passed in 2022, is now on hold pending review by the courts. A study by the Oklahoma Rural Association estimated that state’s ESG boycott had cost the state $185 million to date.

“Contrary to the Treasurer’s assertion, BlackRock has been singularly focused on delivering performance for INPRS, consistent with their objectives. We take direction from our clients, as our business is grounded in our fiduciary obligation to provide our clients with choice,” BlackRock officials said.