BlackRock's Fink defends as 'not woke' push to value more than profits
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[January 18, 2022] By
Akriti Sharma, Ross Kerber and Simon Jessop
BOSTON/LONDON (Reuters) -Larry Fink, chief
executive of the world's biggest asset manager BlackRock Inc, has
defended its focus on the interests of society as well as on profits as
business sense, but drew criticism from campaigners for not going far
enough.
Asset managers increasingly analyse corporate performance on
environmental, social and governance-related issues, to bolster returns
as policymakers push for greater action over issues including climate
change and diversity.
In his annual open letter, Fink built on themes he has raised in
previous January missives to CEOs, calling on them to find a purpose and
to take account of issues including climate change as part of
stakeholder capitalism, whereby companies seek to serve the interests of
all connected to them.
"Stakeholder capitalism is not about politics," Fink said in the letter
late on Monday, entitled The Power of Capitalism.
He said it was not 'woke' and did not have an ideological agenda, but
was capitalist in that it was based on mutually beneficial
relationships.
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Fink, 69, defended BlackRock's stance in engaging with companies on the
transition to a low-carbon economy rather than divesting, saying the
companies cannot be the "climate police" but should work with
governments.
"Divesting from entire sectors – or simply passing carbon-intensive
assets from public markets to private markets – will not get the world
to net zero," he said. "And BlackRock does not pursue divestment from
oil and gas companies as a policy."
MISSED OPPORTUNITY?
While Fink had used previous letters to announce concrete actions by
BlackRock, including the introduction of a tougher threshold for some
funds to invest in coal, the dirtiest fossil fuel, campaigners said the
latest letter was a missed opportunity.
"There’s not much to see here other than more hot air from a would-be
climate leader," said Ben Cushing, Fossil-Free Finance Campaign Manager
with the Sierra Club.
"Larry Fink’s latest letter to CEOs is just another rehashing of the
same vague rhetoric, without any meaningful new commitment to actually
help lead the necessary transition to a climate-safe future."
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![](../images/011822PIX/aa_bus29.jpg)
Larry Fink, Chief Executive Officer of BlackRock, stands at the
Bloomberg Global Business forum in New York, U.S., September 26,
2018. REUTERS/Shannon Stapleton
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Nevertheless, overseeing $10 trillion as of Dec. 31, BlackRock is one of the
most influential voices in U.S. and European boardrooms, making Fink's annual
letter a must-read.
In Monday's letter, Fink unveiled plans to launch a Center for Stakeholder
Capitalism to create a "forum for research, dialogue, and debate." The center
will help to explore the relationships between companies and their stakeholders,
he said.
Fink also said that BlackRock is working to expand an initiative for investors
to use technology to cast proxy votes.
"We are committed to a future where every investor – even individual investors –
can have the option to participate in the proxy voting process if they choose,"
he said.
After years of criticism from activists focused on climate and other ESG issues,
BlackRock changed course in 2021 and cast a much more critical set of proxy
votes such as backing calls for emissions reports or the disclosure of workforce
diversity data.
At the same time the fund manager has faced challenges from conservative U.S.
politicians. On Monday, West Virginia State Treasurer Riley Moore said his
agency would no longer use a BlackRock liquidity fund, where it kept $21.8
million as of Jan. 6.
In a news release, Moore cited BlackRock's dealings in China and noted "that
BlackRock has urged companies to embrace 'net zero' investment strategies that
would harm the coal, oil and natural gas industries."
A BlackRock spokesman declined comment. The company in December acknowledged
some continued fossil-fuel investment will be needed.
(Reporting by Ross Kerber in Boston and Akriti Sharma in Bengaluru; editing by
Richard Pullin, Gerry Doyle and Barbara Lewis)
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