BlackRock is avoiding ESG altogether as they navigate murky political waters.
The 37 billion dollar investment firm seems to be taking fire from both sides, which has CEO Larry Fink at his wit’s end. The UN’s Environmental, Social and Governance grading rubric has been “weaponized by the far left and weaponized by the far right. And we lose the conversation,” Fink told Fox Business.
He thought he already had a headache on his hands when it came to his involvement in fossil fuels. Due to the company diving into alternative energy investment, the Texas Comptroller recommended that five state employee pension funds divest from the investment behemoth. The Comptroller argues any company that invests in alternative energy is actively harming the state’s prized oil and gas industry.
However, Fink notes that Texas leads the nation in both renewable and fossil fuel energy. But of course, everything is a game of politics. The comptroller of New York City, Brad Lander, ran for the position as a hard left progressive, receiving Alexandra Ocasio Cortez’s endorsement for his run in 2021.
“If we do not find a way to dramatically reduce carbon emissions in alignment with the Paris Agreement, the harm will not only be measured in lives lost and people displaced; it will also be measured in trillions of dollars lost in our collective portfolios,” Lander wrote in an open letter explaining why his city shouldn’t do business with BlackRock. Quite the statement, considering that BlackRock has helped install a number of climate-friendly people on Exxon’s boards, while investing billions in alternative energy.
Damned if you do, damned if you don’t.
BlackRock has repeatedly and rightly recognized climate change as an investment risk.
Yet the world's largest asset manager has not taken the necessary steps to address it.
I wrote to BlackRock CEO Larry Fink:https://t.co/Dq6VdqqpzA
— Office of New York City Comptroller Brad Lander (@NYCComptroller) September 22, 2022
So Fink seems to just want to avoid the politics altogether. If those on the left and right are sending incoming fire, why even speak out in support or in opposition of ESG? He’s also drawn the ire of key political players in both parties. When asked by Fox Business if ESG was even safe to say, Fink said, “I don’t say it anymore.”
This fits into a larger narrative as comptrollers, who are tasked with managing pensions and city/state investments, put politics over pocketbooks. ESG factors in as a key distraction.
But that doesn’t seem to be hurting BlackRock, at least according to Fink. “Our clients are coming to BlackRock more today than ever in history. So despite all the narrative, because we’re a fiduciary, we do what our clients are asking them, and we have good performance, and we’ve been right on market calls,” he said.
But is ignorance truly bliss? The general thinking is that corporations have to play ball with the ESG criteria, considering that the UN and other left leaning institutions are big investors. It’s hard to say, but in February, BlackRock was trading at 770.73. Now? They’re down to 677.80, signaling a consistent, downward trend.
Corporations world-wide are probably waiting to see the results of Fink’s risky play. But if his stock slowly ticks up, ESG may very well be a thing of the past.
Our Patrick Bet-David recently discussed the ESG movement and how it’s being used as a weapon to control corporate America. Watch below …
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