For all the boasts and claims that BlackRock CEO Larry Fink has made in recent years about the need for corporate “accountability” with regard to environmental, social, and governance (ESG) priorities, and that they are a better long-term investment prospect, he has consistently fallen short in the eyes of experts who evaluate those things.
First there was the academic study released in August that found that despite claims to the contrary by major financial firms – including BlackRock – that ESG factors did notinoculate investors against the stock market downturn that was attributed to the COVID crash of the global economy, nor did sustainability priorities aid in the subsequent limited recovery.
And now it turns out that one of BlackRock’s non-profiting investment priorities ballyhooed by Fink – climate change – is not all he cracks it up to be.
A report released last month by global warming-focused nonprofit shareholder activist Majority Action stated that, despite being the world’s largest asset managers and top holders of S&P 500 corporations with ESG emphases, BlackRock (and Vanguard Group) “continued to undermine global investor efforts to promote responsible corporate climate action.”
The report, titled “Climate in the Boardroom: How Asset Manager Voting Shaped Corporate Climate Action in 2020,” evaluated the world’s 12 largest asset managers (holding an aggregate $27.7 trillion in assets) on their votes pertaining to director elections and climate-focused shareholder proposals.
Among the findings, BlackRock:
- “… voted for nearly all (99%) U.S. company-proposed directors across the energy, utility, banking, and automotive sectors…”
- Often “support(ed) management at utilities that had not made a net-zero (greenhouse gas emissions) commitment…”
- “Voted overwhelmingly against the climate-critical resolutions at S&P 500 companies reviewed in this report…supporting just three of the 36…”
- “Despite joining Climate Action 100+ in early 2020, BlackRock voted against 10 of the 12 shareholder proposals flagged by the coalition…”
That kind of record just isn’t cutting it, according to the climate alarmism group.
“They are doing everything except the things that matter the most,” said Eli Kasargod-Staub, Majority Action executive director, in an interview with website Pensions & Investments. “We are definitely seeing other asset managers taking stronger stances.”
The massive asset manager defended its decisions.
“BlackRock investment stewardship focuses on advocating for the corporate governance and business practices that add to the value of our clients’ investments — that means both engagement and voting…,” a spokesman told P&I. “It’s worth noting that not all shareholder proposals are created equal, and it would be wrong to equate good governance with voting against management without regard for a proposal’s impact. Blindly supporting proposals is not a responsible approach to stewardship.”
So apparently BlackRock and Fink have established themselves as arbiters of what constitutes legitimate and worthwhile proposals – and corporate leadership – to implement climate measures, rather than groups that focus solely on the issue, or even respected research firms like Morningstar.
BlackRock often boasts about its ESG efforts. In July the firm put some companies in its portfolio on notice that their efforts to address transparency and mitigation regarding “climate change” were insufficient. BlackRock disclosed that it had warned 244 of those companies that they insufficiently address climate concerns, and that it had voted against resolutions and directors at 53 of them because of those shortcomings. It warned the other 191 companies they “risk voting action in 2021 if they do not make substantial progress.”
And despite the criticisms from Majority Action and Morningstar, BlackRock continues to publicize its actions regarding ESG and climate. According to Reuters, the firm last month added three funds that “will screen out companies with certain levels of investment in the thermal coal, oil sands or shale energy sectors.”
Also last month, BlackRock said in its annual investment stewardship report that it opposed votes for 55 directors at 49 companies due to their insufficient progress to address climate change. More broadly, “it announced…that it cast more than 5,100 votes against company directors in the past 12 months to hold management to account for failing to make headway on a range of issues, from environmental goals and corporate strategy to board diversity,” The Guardian reported.
And BlackRock seemingly plans to ignore a proposed rule by the Department of Labor that, under the Employee Retirement Income Security Act of 1974, investors managing federal employees’ retirement investments may not subordinate maximization of financial returns (i.e. “profit”) to other purposes such as ESG.
“As we sit here today, we have raging fires. We have a hurricane. We have five tropical storms in the Atlantic. We have had record heat throughout the world,” Fink said last month in re-emphasizing its commitment to ESG investment considerations. “We are seeing more and more examples of how climate change is becoming investment risk.”
Fink’s sincerity on climate might be more believable if he was consistent in his approach. While he has made a big deal about BlackRock’s shareholder voting decisions to hold American companies “accountable” on ESG priorities – especially climate change – he has not turned up the heat in that regard with the firm’s investments in Chinese companies listed on American exchanges. China is the world’s largest emitter of pollutants and greenhouse gases.
National Legal and Policy Center, as well as a pair of Republican senators, have confronted Fink and BlackRock about its double standards in how it treats American corporations while caring little about Chinese companies. And when challenged in May by the National Center for Public Policy Research at its annual shareholder meeting about the discrepancy, he declined to respond.
It seems the only person happy with Fink’s self-promotion and virtue signaling is himself.