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BlackRock facing political pressure from state officials of both parties (2022)
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Writing at National Review Online last week, Andy Puzder, the former CEO of CKE Restaurants and a visiting fellow at The Heritage Foundation, argues that leading ESG asset management firm BlackRock is facing pressure from Republican states to deemphasize its ESG investing strategy and focus on investment performance. At the same time, Democratic states are pressuring the company to continue with its ESG investing strategy:
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The world’s largest asset manager, BlackRock Inc., has lodged itself securely between a blue-state rock and a red-state hard place because of its environmental, social, and governance (“ESG”) investment criteria. While left-leaning states have long supported BlackRock’s ESG investing, conservative states increasingly object. In August, 19 red-state attorneys general sent BlackRock CEO Larry Fink a letter stating that BlackRock’s ESG investing violates their laws governing fiduciary duties. According to these AGs, investor returns must be a fiduciary’s sole focus, and BlackRock is sacrificing those returns to advance its “net-zero” carbon emissions agenda. The AGs’ concerns are not unfounded. BlackRock is a net-zero zealot. Its “Path to Net Zero” website states that “the transition to a net zero world is the shared responsibility of every citizen, corporation, and government” and describes at length BlackRock’s commitment to that transition. But is that commitment really in BlackRock’s clients’ best financial interests? As John Kerry, President Biden’s climate envoy, stated in a recent interview, some of BlackRock’s clients “want the best return they can get,” and “you don’t get that necessarily from climate” related investments. He’s right, of course. Fink’s own 2022 letter to CEOs conceded that “[w]e need to be honest about the fact that green products often come at a higher cost.” Thanks for the honesty, but you don’t need an accounting degree to know that high-cost/low-return “climate” policies will reduce a company’s profits — and its investors’ returns. So, perhaps it’s no surprise that, since January of 2022, red-state treasurers in Missouri, South Carolina, Louisiana, Utah, Arkansas, and West Virginia have announced the divestment of over $3 billion in assets from BlackRock’s management because of its ESG and net-zero policies…. the blue-state reaction is already beginning. Concerned that BlackRock might moderate its net-zero stance to retain red-state clients following the AGs’ letter, 14 blue-state financial officers launched a website ironically criticizing red states for the negative financial consequences of “blacklisting financial firms that don’t agree with their political views” and failing to acknowledge that “climate change is real.” Everybody knew this was a signal to BlackRock and other financial firms not to back away from ESG and net zero. A week later, New York City comptroller Brad Lander went and said the quiet part out loud. He wrote to Fink, concerned that BlackRock might moderate its commitment to net zero to the detriment of both New York City pensions (which fall under his purview) and “our planet” (which does not). Lander wants BlackRock to make its net-zero commitment clear “across its entire portfolio,” dedicate itself “to keeping fossil fuel reserves in the ground,” and work “to end lending and insurance for new fossil fuel supply projects.” Lander also noted, with little subtlety, that he “will be prudently reassessing” the city’s business relationship with BlackRock, “through the lens of our climate responsibilities.” Talk about blacklisting financial firms that don’t agree with your political views! BlackRock manages approximately $43 billion for New York City. And that’s why BlackRock is between a rock and a hard place.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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