BlackRock CEO Larry Fink said the Republican-led blowback against environmental, social, and governance initiatives has become polarizing and “personal.”
Speaking at the World Economic Forum in Switzerland, Fink discussed how BlackRock, which is the world’s largest money manager, has become a pioneer in promoting corporate environmental, social, and governance, or ESG, initiatives, which has ultimately painted a GOP target on its back.
“I’m taking this very seriously,” Fink said during an interview with Bloomberg. “We are trying to address the misconceptions. It’s hard because it’s not business anymore, they’re doing it in a personal way. And for the first time in my professional career, attacks are now personal. They’re trying to demonize the issues.”
Critics on the Right have hammered ESG over the past year or so as the issue rose to prominence not just within the economic world, but also in the world of politics. The phrase is oftentimes used as a cudgel against companies that consider social and environmental issues such as climate change in addition to just returning shareholder value.
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Those against ESG contend it’s a way of forcing a political viewpoint on the corporate community and cuts against the merits of capitalism. Proponents, such as Fink, deny that they are trying to force their stances on anyone and deny Republican accusations that they are working to “boycott” the fossil fuel industry.
“Let’s be clear, the narrative is ugly, the narrative is creating this huge polarization,” Fink said. “If you really read the CEO letters that I’ve written in the past, I talk about a transition.”
Several Republican-led states have taken prominent stands against ESG (and BlackRock in particular) this past year.
Last month, Florida’s chief financial officer said the state would divest some $2 billion from the money manager, the largest such state divestment from BlackRock yet over its stance on environmental and social goals.
“As major banking institutions and economists predict a recession in the coming year, and as the Fed increases interest rates to combat the inflation crisis, I need partners within the financial services industry who are as committed to the bottom line as we are — and I don’t trust BlackRock’s ability to deliver,” said Florida CFO Jimmy Patronis.
States such as South Carolina, Utah, Arkansas, Missouri, Louisiana, and others have also divested or announced planned divestments of hundreds of millions of dollars from BlackRock and Fink.
Additionally, earlier this month, Kentucky’s state treasurer came up with a list of nearly a dozen financial firms the state accuses of boycotting energy companies and warned that the state could divest from them in a matter of months.
Kentucky Treasurer Allison Ball told the Washington Examiner that the Kentucky legislature passed a bill that empowers Ball’s office to identify firms that “boycott” energy companies. The firms are now subject to divestment after 120 days, although Ball said she hopes they decide to change their policies so the state won’t have to do so.
“We’re a fossil-fuel producing state, so it’s very important to us,” Ball said.
BlackRock itself has worked to clarify its positions amid the pushback. Last year, the firm launched a webpage committed to “setting the record straight” about how it handles investment decisions and disclosure and its pursuit of ESG.
While BlackRock and Fink have been accused of trying to harm the energy industry, BlackRock contends that it merely asks 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.
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“We believe that companies that better manage their exposure to climate risk and capitalize on opportunities will generate better long-term financial outcomes,” the company said.
The World Economic Forum is held annually in Davos, Switzerland. It brings together some of the most powerful business, political, and economic figures across the world to discuss a wide array of socioeconomic issues.
