Unrepentant BlackRock Won’t Use ESG Term, Still Forces Divestment
ANTI-DRILLING/FOSSIL FUEL | ESG | INDUSTRYWIDE ISSUES
Unrepentant BlackRock Won’t Use ESG Term, Still Forces Divestment
ANTI-DRILLING/FOSSIL FUEL | ESG | INDUSTRYWIDE ISSUES
June 27, 2023
Other than not using the term ESG (environment, social, governance), Larry Fink, the CEO of the world’s largest investment firm, BlackRock, hasn’t changed. He intends to keep pushing ESG without calling it that. Fink tells the companies that BlackRock invests in to lower carbon emissions (i.e., stop using fossil energy, and stop making loans to fossil energy companies). He is completely unrepentant, even though state after state is dropping his company’s services.
By our count, at least six states (WV, OH, TX, FL, KY, OK) have pulled state business from BlackRock, the most recent being Oklahoma (see Oklahoma Blacklists 13 Financial Firms, Including BlackRock). BlackRock has lost billions of dollars in business from these states. When you manage trillions, it doesn’t make much of a dent. The concern (for BlackRock) is that the trend will grow, and other states will also leave.
Generating tons of carbon dioxide by using a private jet, Fink flew to Aspen, CO, to the Aspen Ideas Festival this past weekend to share his views on ESG. He’s such a hypocrite. Fink’s carbon footprint is about as big as Al Gore’s, yet he demands others reduce their carbon footprint.
Several years ago, Fink began to tell the companies that BlackRock invests in to shape up (clamp down on carbon emissions) or risk losing money from BlackRock. Fink’s choice of terminology, his attempt to sugarcoat his edicts, was “ESG.”
Fink said in Aspen that he no longer uses the term ESG because it has been “weaponized” by both the right and the left. So, he just doesn’t use the term. However, he still believes in “conscientious capitalism,” by which he means ESG.
Fink is in a funk because he’s been outed, he’s been exposed for his extreme leftwing views. Yet he tries to portray himself as a victim, someone who walks in the middle of the road. That’s a lie. It’s time to divest from BlackRock.
We have two reports from the hoity-toity meeting held in Aspen. First up, from Reuters:
BlackRock boss Larry Fink, at the forefront of the business world’s adoption of environmental, social and corporate governance (ESG) standards, has stopped using the term, saying it has become too politicized.
But the world’s largest asset manager hasn’t changed its stance on ESG issues, Fink told the Aspen Ideas Festival on Sunday.
ESG, a catch-all term that encompasses a range of ethically responsible business practices, from curbing carbon emissions to cracking down on discrimination in the workplace, has become politically polarizing in parts of the Western world, especially in the United States.
Republican politicians have attacked ESG as a way for the corporate world to implement what they argue is a politically liberal agenda, triggering a backlash from Democrats who are seeking to defend it.
The controversy has led to some Wall Street firms backing down on ESG commitments, with insurers abandoning a United Nations-backed climate alliance becoming the latest example last month. BlackRock has itself been the target of investigations by some Republican-controlled states, and even an investment boycott in Texas.
“I don’t use the word ESG any more, because it’s been entirely weaponised … by the far left and weaponised by the far right,” Fink said.
But he said dropping references to ESG would not change BlackRock’s stance. The firm would continue to talk to companies it has stakes in about decarbonization, corporate governance and social issues to be addressed, he added.
On the issue of climate change, BlackRock has sought to strike a balance, continuing to invest in fossil fuel companies while nudging them to adopt energy transition plans. It has projected that by 2030 at least three quarters of its investments will be with issuers of securities that have scientific targets to cut greenhouse gas emissions on a net basis.
Fink had said in January that BlackRock had lost about $4 billion in managed assets as a result of the backlash against ESG, a tiny sliver of its $9 trillion under management. He reiterated at the Aspen conference that there had been no material impact on BlackRock’s business.
“We had … one of the best years ever, but I’m ashamed of being part of this conversation,” said Fink, adding that his annual letters to investors that addressed ESG issues were never meant to be political statements. (1)
From Fortune magazine:
In 2018, BlackRock CEO Larry Fink wrote his annual letter as in previous years—but this one was different in that he broached the subject of companies serving “a social purpose.” That marked the world’s largest asset manager’s entry into a long-drawn political debate over investments that prioritize ESG (environmental, social, and governance) factors.
But five years after championing the cause, Fink now says he’s “ashamed” of being part of all the ESG talk—not because it isn’t worthwhile, but because it has become too politicized.
“I’m ashamed of being part of this conversation,” Fink said at the Aspen Ideas Festival on Sunday, Axios reported. “When I write these letters, it was never meant to be a political statement…They were written to identify long-term issues to our long-term investors.”
Later in the conversation, when asked for more about his comment on the ESG debate, Fink walked back his stance.
“I’m not ashamed. I do believe in conscientious capitalism,” Fink said.
The billionaire chief of BlackRock, which manages upwards of $9 trillion in assets, pioneered the idea of ESG before it became a buzzword in investing. ESG covers a broad spectrum of topics—from climate change to diversity to inclusion initiatives. BlackRock has since been caught in a tug-of-war, with Republicans calling the firm’s ESG push “woke capitalism” and progressives accusing it of “greenwashing,” or championing practices that aren’t as environmentally sound as they appear to be. Fink said that given how the term ESG had become “weaponized,” he wants to stay away from using it altogether.
??“I’m not going to use the word ESG because it’s been misused by the far left and the far right,” Fink said, according to Axios.
Fink has spoken out about the criticism he has received as the unofficial face of ESG. In January, he said the attacks had gotten personal and that he was working on addressing “misconceptions” about BlackRock’s ESG policies.
“It’s hard—because it’s not business anymore, they’re doing it in a personal way,” he told Bloomberg during an event. “And for the first time in my professional career, attacks are now personal. They’re trying to demonize issues.”
It wasn’t always this way, though. Initially, BlackRock was synonymous with ESG and an important part of the Net Zero Asset Managers Initiative, a UN program aimed at finance companies reaching net-zero emissions goals by 2050. Fink’s letters even in 2019 and 2020 spoke of changes in how investing is viewed and how concerns like climate change were becoming a cornerstone for BlackRock.
“In the near future—and sooner than most anticipate—there will be a significant reallocation of capital,” he wrote in his annual letter from January 2020. “Climate change has become a defining factor in companies’ long-term prospects.”
In Fink’s 2022 letter, the focus had shifted to stakeholder capitalism, a concept based on companies serving the interests of all stakeholders, defending the attacks on BlackRock’s ESG stance from conservatives.
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” he wrote.
But several advocacy groups opposed BlackRock’s ESG push, accusing it of investing in China despite reports of human rights abuse of workers as well as in companies that harm the environment.
Several states also weighed in on the debate, with Texas claiming that BlackRock’s mission was “boycotting” fossil fuel companies and Florida threatening to withdraw $2 billion worth of treasury funds from the asset manager.
Despite the increasingly polarized debate over ESG, Fink seems intent on pursuing the cause.
“This is not going to be perfect, and it’s not going to be a straight line,” he told the Australian Financial Review earlier this month.
BlackRock declined Fortune’s request for comment. (2)
(1) Reuters (Jun 26, 2023) – BlackRock’s Fink says he’s stopped using ‘weaponised’ term ESG
(2) Fortune (Jun 26, 2023) – BlackRock CEO Larry Fink, who faced intense backlash for championing ESG, says he’s ‘ashamed’ the topic has become politicized