In a podcast interview this week with Wall Street Journal editor-at-large Gerry Baker, BlackRock Chairman/CEO Larry Fink denied he ever imposed environmental, social and governance (ESG) demands on companies where his firm is invested — which is every public company you can think of:
Baker: You are a big shareholder… in many of America’s largest companies in many … companies around the world… thousands of companies around the world…And it’s true, isn’t it, that you do use that power, sometimes with board seats or proxy votes or whatever, you use that power to coerce, or to at least put it, to incentivize companies…
Fink: I disagree with that…
Baker: …You don’t do that?
Fink: BlackRock does not do coercion. We are trying to be informed for financial gain, okay? We have the largest financial corporate stewardship team in the world. Our job is to be engaged with companies, understand how they’re moving forward…
Baker: So… decarbonization, you’re not encouraging companies through your significant stakeholding … in those companies to pursue particular decarbonization approaches?…
(Fink filibusters as he avoids the question)
Baker: So BlackRock does not use, again, any of its power, its influence to pursue-
Fink: Never.
Baker: I mean, because you’ve just told me that you think decarbonization is the long… transitioning to the green economy, as it’s called, is important for the world, is important for business.
Fink: Yes.
Baker: But even though you believe that, you don’t think that BlackRock is trying to achieve that outcome through its deployment of its capital?
Fink: It’s not our fiduciary responsibility.
Seems like Fink wants to erase or rewrite his and BlackRock’s history on ESG coercion. In 2018 he wrote:
To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society…Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate. Without a sense of purpose, no company, either public or private, can achieve its full potential.
The Washington Post reported about his 2018 letter to CEOs:
[Fink] put CEOs on high alert that they would be expected to answer questions about their long-term strategy, how they plan to use savings from the tax reform law, what role they play in their communities and whether they are creating a diverse workforce that is being retrained for opportunities in a more automated future…
Fink’s letter used stronger language, experts said, than his recent annual letters to CEOs, which have focused on long-term strategies and the environmental, social and governance practices (often called “ESG” factors) of the companies in which they invest. In this year’s letter, Fink said he would double the size of BlackRock’s team that engages with companies to try to get them to do more on such issues.
Shortly after that letter, BlackRock issued more demands, as the Wall Street Journal reported at the time:
BlackRock, Inc. said in a new set of proxy voting guidelines posted this week on its website that it wants its portfolio companies to have diverse boards and that “we would normally expect to see at least two women directors on every board.”…
Michelle Edkins, global head of investment stewardship at BlackRock, recently wrote to about 300 companies in the Russell 1000 that have fewer than two women on the board to ask them to disclose their approach to boardroom and employee diversity.
“We believe that a lack of diversity on the board undermines its ability to make effective strategic decisions. That, in turn, inhibits the company’s capacity for long-term growth,” Ms. Edkins wrote in those letters, according to a copy reviewed by the Journal. She also asked those companies to establish a time frame in which they will improve their diversity.
In 2020, BlackRock became even more insistent:
Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products, and engages with companies. We believe that sustainability should be our new standard for investing.
Over the past several years, we have been deepening the integration of sustainability into technology, risk management, and product choice across BlackRock.
Fink notified CEOs in his 2020 missive:
BlackRock announced a number of initiatives to place sustainability at the center of our investment approach, including: making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.
In 2021, shortly after the installation of Fink’s choice for President and as the White House administration began to be populated with BlackRock alumni, Reuters reported that Fink’s CEO letter (which BlackRock has disappeared from discovery on its own search engine) “flexed what green muscles he has.” My interpretation:
“The world is moving to net zero,” Fink wrote, “and BlackRock believes that our clients are best served by being at the forefront of that transition.”
And if you have no plan? Then you may be off your board soon, or out of that CEO position. It’s 2021, after all, and you will be canceled.
“We are carbon neutral today in our own operations and are committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner,” Fink continued. “No company can easily plan over 30 years, but we believe all companies – including BlackRock – must begin to address the transition to net zero today.”
Fink sure was feeling himself in 2021, when he also demagogued the Georgia election law:
Equal access to voting is the very foundation of American democracy. While BlackRock appreciates the importance of maintaining election integrity and transparency, these should not be used to restrict equal access to the polls. BlackRock is concerned about efforts that could limit access to the ballot for anyone. Voting should be easy and accessible for ALL eligible voters. Voting is not just a right, but a vital component of civil activity. We should encourage all eligible voters to play this essential role in our democracy.
At the same time he doubled down on investment in countries that are totally devoid of honest elections:
We are committed to investing in China to offer domestic assets for domestic investors and look forward to creating a better financial future for more people.
And in the famous proxy board battle at ExxonMobil in 2021, BlackRock voted its significant number of shares in support of three director nominees backed by pro-ESG activist fund Engine No. 1. As NLPC chairman wrote in a RealClearMarkets commentary at the time:
The popular media narrative is that this latest Exxon shareholder campaign was conducted by a small group of activist shareholders. But Engine No. 1‘s effort to chivy Exxon into changing its business strategy to please environmentalist investors and their allies would likely have gone nowhere without the timely intervention of Fink, Chairman and CEO of BlackRock.
On Wall Street as elsewhere, size matters. BlackRock is the world’s largest asset management group, with more than $8.6 trillion under its control. To put that number in context, consider that the entire budget for the U.S. Government for FY 2021 totals $4.82 trillion. Compared to BlackRock, Exxon’s estimated $350 billion net worth makes it look like a mom-and-pop gas station. If this were a contest between David and Goliath, Exxon would be David with his meagre slingshot and BlackRock would be Goliath in the cockpit of a Lockheed Martin F-22 Raptor.
Now Fink acts like ESG is a dirty term, and tells the Journal that he and BlackRock aren’t the woke thugs every red state attorney general and treasurer are pointing them out to be.
Sorry Larry, we’ve got the receipts, and they’re also still on your website.
