BlackRock: A retreat from ‘sustainable’ investing
Is the face of sustainable investing giving up on ESG? asked Andrew Ross Sorkin in The New York Times. BlackRock, the world’s largest asset manager, “made a name for itself in recent years by publicly embracing environmental, social, and corporate governance considerations—known as ESG—in its decisions.” Its chief executive, Larry Fink, argued for years that “other companies should do the same.” But environmentalists were dismayed by the news last week that BlackRock had named Amin Nasser, the CEO of oil giant Saudi Aramco, to its board. The move seemed aimed at cooling attacks from conservatives, who have “withdrawn billions of their assets from its coffers in retribution” for what they consider to be “woke” politics. Fink has even stopped using the term “ESG,” calling it “a weaponized” term, although he said he still wants companies to decarbonize.
Fink’s right to retire this “ideologically tinged” term, said Mike Viola in National Review. His comments should be “welcomed” as evidence that people pushing ESG are noticing that it’s “proving embarrassing and, perhaps, bad for business.” For years we’ve been hearing that “ESG is the future,” but most companies still don’t even know what it means, and thus they “interpret the term in different ways.” Investors have been let down “with unclear goals, politicized portfolios, and disappointing returns.” ESG returns briefly looked good because investors flocked to the same trendy ESG-approved companies, said Rick Newman in Yahoo Finance. In reality, the ideas behind it were “counterproductive, outdated, and ineffective,” a “politicized backlash” that put corporations in the culturewars crossfire. “There are a lot of investors who want to feel good about the companies they invest in.” But ESG advocates demanded that corporations take sides in battles that really belong to “activists.”
Fink became a progressive hero when he declared in his annual open letter in 2020 that “climate risk is investment risk,” said Rebecca Ungarino and George Glover in Business Insider. It’s now safe to wonder whether his firm was ever “as socially conscious as it says it is.” BlackRock claims Saudi Aramco is “a leader in promoting” decarbonization efforts, but Nasser is on the record criticizing them as “flawed.” The world can’t afford to see Fink abandon his principles now, said Evan Halper in The Washington Post. BlackRock is “so large that it and two other companies could control more than a third of shareholder votes in the S&P 500 within five years.” That clout made its embrace of ESG significant. If Fink gives up the fight, it could go a long way toward determining “whether the world achieves its goal of limiting the most disastrous effects of climate change.”