BlackRock encourages SEC to mandate ESG-related disclosures for private companies (2021)
| Environmental, social, and corporate governance |
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According to The Wall Street Journal, BlackRock—the largest asset management firm in the world—and others are trying to persuade the SEC to get involved in forcing privately held companies to embrace sustainability and other ESG practices:
| “ | “It’s not enough for socially enlightened masters of finance like BlackRock and Nasdaq to push around publicly traded companies. Now they want the Securities and Exchange Commission to impose their social and political agenda on all companies, including private firms.
The SEC is expected soon to propose rules requiring companies to publicly disclose climate, board diversity and human-capital metrics. Large asset managers and government pension funds have found mixed success pressuring public companies to adopt these disclosures, which is why they are now endorsing government coercion…. Nasdaq CEO Adena Friedman wrote in these pages in February that the exchange’s board diversity rules would help “create momentum toward an approach to capitalism that offers more opportunity to more people” and show this “can be accomplished through a market-driven solution—rather than government intervention.” Now she’s supporting government intervention. “Were the SEC to consider [board diversity] at more of a regulatory level, we would also hope that they would consider private and public companies,” she told the Council of Institutional Investors last month. “We do think at the end of the day every company should have diversity as part of their consideration, and only the SEC has the ability to establish standards at the private company level. So I think that would be an interesting way for them to expand it very significantly.” Yes, it sure would…. BlackRock wrote in an SEC public comment that “we encourage the SEC to explore its existing regulatory authority to mandate climate-related disclosures with respect to large private market issuers” in order “to avoid regulatory arbitrage.” The Investment Company Institute, which represents large asset managers, echoed its sentiments. Ms. Friedman, Mr. Fink and friends no doubt recognize that burdensome ESG mandates, which also carry substantial litigation and reputational risks, will cause many companies to shun public markets. This would hurt stock exchanges and asset managers, but most of all retail investors. So now they want to foist their ESG regime on private companies too.”[1] |
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In the February 16 edition of this newsletter, it was reported that Larry Fink, the CEO of BlackRock, specifically asked the government to stay out of the ESG business and to focus its energies on privately held companies:
| “ | BlackRock CEO Larry Fink, who has been hailed by some as a corporate leader in fighting climate change, is putting his weight behind a call for companies to abide by a voluntary global standard instead and is warning against the potential shortfalls of government intervention….
BlackRock’s Fink argues that many publicly traded companies — those accustomed to sharing information widely with investors — are on track to manage their climate risk amid growing market pressure. He says the government should focus on privately held firms that are taking on more carbon-intensive businesses but don't divulge as many details of their operations…. “We’re going to see a vast change in the public company arena worldwide,” he said at a Brookings Institution event Tuesday. “They are going to move forward. We’re not going to need really governmental change or regulatory change.”[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
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