BlackRock is hitting back at “inaccurate” accusations from Republican attorneys general who allege the firm is hurting their states and its own customers by pursuing environmental and social justice goals.
Last month, 19 GOP attorneys general sent a letter to BlackRock CEO Larry Fink, who is increasingly becoming a Republican target, challenging the money manager’s commitment to environmental, social, and governance principles. They claimed that BlackRock’s policies are undercutting shareholder profits in managing state pension funds.
In response, Dalia Blass, BlackRock’s head of external affairs, said in a letter to the group of attorneys general that climate change is becoming a major risk and that investors and clients want to be apprised of the risks in order to achieve better returns.
“Governments representing over 90% of global GDP have committed to move to net-zero in the coming decades,” said Blass. “We believe investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes. These opportunities cut across the political spectrum.”
RED STATES PUSH BACK ON CORPORATE ANTI-FOSSIL FUEL INITIATIVES
The Republican attorneys general contend that BlackRock’s actions may violate state laws surrounding pension funds that require a sole focus on financial returns.
“Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda,” the attorneys general said. “The time has come for BlackRock to come clean on whether it actually values our states’ most valuable stakeholders, our current and future retirees, or risk losses even more significant than those caused by BlackRock’s quixotic climate agenda.”
BlackRock said in its response letter that the attorneys general misunderstand BlackRock’s ESG policies, noting that they ask companies to provide disclosures on material issues that affect their businesses so that investors can appraise risks, such as climate change, and make informed financial decisions. BlackRock claims that its policies are merely “focused on enhancing transparency.”
“We do not, as suggested in your letter, dictate to companies what specific emission targets they should meet or what type of political lobbying they should pursue,” Blass said. “That is the role of the company’s management team and the board of directors — it is not the responsibility of minority investors such as BlackRock.”
Following BlackRock’s letter, Arizona Attorney General Mark Brnovich told the Washington Examiner that the response “was disappointing, to say the least.”
“It’s sad that some groups are more interested in pushing a far-left agenda than protecting Americans from skyrocketing energy costs,” he said.
Indiana Attorney General Todd Rokita said BlackRock’s ESG initiatives are at odds with what should be its mission.
“The reason for this leftward drift of corporate America is the rise of ‘woke capital.’ ESG investments are not designed to maximize profits. They are purely to shove the Left’s social and economic agenda on to every consumer,” Rokita told the Washington Examiner.
Fink, who has run BlackRock for decades and is perhaps the most powerful man on Wall Street, has emerged as a key adversary for Republicans, given his push for more corporate involvement with climate change and for BlackRock’s dalliances in Chinese markets.
In 2020, the BlackRock CEO said in his annual must-read letter that there should be a focus on climate change, noting that the topic was becoming a “defining factor” in its assessment of companies. After the letter, several corporations announced plans to slash their carbon footprints, illustrating the sway that Fink has over the financial world.
Last year, BlackRock began tapping into the Chinese market by offering mutual funds and investment products to Chinese investors, becoming the first foreign-owned firm to be allowed to do so. In addition, the research arm of his company also encouraged investors to triple their exposure to Chinese assets.
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This year, Fink used his annual letter to CEOs to defend BlackRock from accusations that it is “woke.” He said that the elevation of stakeholder capitalism, which deviates from the traditional shareholder capitalism model that purely emphasizes returns, is an improvement on traditional business models.
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper,” Fink said.
