Illustration: Sarah Grillo/Axios
This year’s chairman’s letter from BlackRock CEO Larry Fink, published on Wednesday, places less emphasis on climate risk and environmental, social and governance (ESG) investing than previous letters, but does not downplay the substance. .
Why is this important: As the head of the world’s largest asset manager, Fink’s letters are widely seen as a signal of how the financial community views certain topics and how policymakers might need to react.
Driving the news: His latest letter deviates from those of recent years, which have largely focused on the need to integrate climate risk, ESG concerns and broader corporate responsibility issues into the way business should be conducted. .
- BlackRock is a favorite target of right-wing interest groups and Republican lawmakers, who have accused the company — and specifically Fink — to push a so-called “woke” investment trend that does not serve the interests of investors.
- Recently, several states have decided to withdraw money from BlackRock funds, alleging the company boycotts fossil fuels, which the company again refutes in the new letter by touting its investments in natural gas.
Between the lines: Fink’s latest dispatch fails to focus on ESG investing – an increasingly politically charged topic — compared to its last annual letters. In fact, the term ESG does not appear anywhere in the letter.
- Energy transition concerns are only mentioned in paragraph 18, and the word “climate” only appears on the eighth page of the long letter. Even when this is the case, the climate is only used five times.
Enlarge: Still, the letter says the company is not backing down from climate concerns.
- “For years, we have viewed climate risk as an investment risk. It still does,” the letter said.
- Fink discusses the investment opportunities associated with the energy transition, the potential financial repercussions of extreme weather events related to climate change, and the need for companies in which BlackRock invests to disclose their climate change risks.
- Fink positions BlackRock as offering choices to customers. It also clarifies that the firm is not directing companies it invests in to take certain actions on climate change or other issues, with a more passive approach to proxy voting than in the past.
Yes, but: Fink’s statement that asset managers, including BlackRock, should not set policy or “be the police of the environment” contrasts with its letter to investors 2020.
- This letter stated: “BlackRock does not see itself as a passive observer in the low carbon transition. We believe we have an important responsibility – as an index fund provider, as a trustee and as a member of society – to play a constructive role in the transition.
The plot: Environmental groups have warned of Fink’s messages about consumer choice in particular.
- “Despite what BlackRock may say, the company appears to be giving ground to those trying to undermine the financial sector’s role in addressing the climate crisis,” said Cleo Rank, sustainable finance analyst at watchdog InfluenceMap. lobbying.
What they say : “[BlackRock is] the 800-pound gorilla here and they are definitely walking a tightrope,” Daniel Firger, managing director of Great Circle Capital Advisors, a climate finance consultancy, told Axios in an interview.
- “It’s heartening to see the world’s largest asset manager not backtracking on its very clear fiduciary mandate to think about climate-related risks,” he said.