Larry Fink finds way to dodge ESG crosshairs

Chairman and CEO, BlackRock, Larry Fink, speaks during the Clinton Global Initiative (CGI) meeting in Manhattan, New York City, U.S., September 19, 2022.
Chairman and CEO, BlackRock, Larry Fink, speaks during the Clinton Global Initiative (CGI) meeting in Manhattan, New York City, U.S., September 19, 2022. REUTERS/David 'Dee' Delgado

LONDON, March 15 (Reuters Breakingviews) - Seismic events elsewhere are making it easier for BlackRock (BLK.N) to inch away from the environmental, social and governance crosshairs. The $8 trillion asset manager’s chair Larry Fink used his annual investor letter to theorise that inflation might stay around 4%, predict stricter bank capital requirements, and namecheck his favourite 80’s band, Talk Talk. Less front and centre than in previous years was a preoccupation with climate change.

Fink’s 2020 missive cited a desire for BlackRock’s actively managed portfolios to limit exposure to thermal coal. The following year, he stressed that BlackRock expects the companies it invests in to have some sort of plan to decarbonise their businesses by 2050. BlackRock still backs these objectives, but Fink’s 2023 letter doesn’t even mention ESG. Instead, he notes that government policy, technological innovation and consumer preferences will determine the pace of decarbonisation. He also stresses it’s not minority shareholders’ place to tell companies what to do.

That in itself reflects BlackRock’s invidious position between green lobbyists that want it to use its heft to do more on climate change and U.S. states that will pull cash if it does so. It has for some time tried to distance itself from those who see the energy transition as an immediate charge out of fossil fuels. The good news for Fink is that U.S. banking collapses and spiralling inflation mean his detractors’ attention is, at least for now, elsewhere. (By George Hay)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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