By Zachary Halaschak, Economics Reporte. Media: Washington Examiner.
BlackRock CEO Larry Fink said he would stop using the term “ESG” because of the politically charged environment that now surrounds it.
Fink, who has become a punching bag for the Right over his firm’s embrace of environmental, social, and governance principles, known as ESG, said on Sunday during the Aspen Ideas Festival that he doesn’t like being at the center of the debate over ESG, which has grown increasingly fierce over the past couple of years.
“I’m ashamed of being part of this conversation,” Fink said, according to Axios.
Later in the event, though, Fink was pressed about his comment about being ashamed. He then said he never said that.
“I never said I was ashamed,” Fink said. “I’m not ashamed. I do believe in conscientious capitalism.”
Still, Fink said ESG as a concept has been “weaponized” and blamed the extremes from the Right and the Left for generating such an uproar.
“I’m not going to use the word ‘ESG’ because it’s been misused by the far Left and the far Right,” Fink told the crowd. Still, Fink said he isn’t abandoning the precepts that underlie ESG.
His statements are notable because BlackRock has become closely associated with the ESG movement and subsequent Republican backlash.
Fink has taken to writing an open investment letter each year that is considered a must-read for executives and business leaders. In 2020, he used his letter to focus on climate change, saying the matter was becoming a “defining factor” in BlackRock’s assessment of companies. That heralded a bit of a shift in the ESG movement and caused more companies to integrate climate considerations into their business models.
And Fink’s shift away from using the term “ESG” doesn’t come entirely as a surprise. Fink’s letter this year didn’t include one mention of ESG and deemphasized talk about the climate, saying that companies aren’t “the environmental police,” a tone shift from recent years as GOP pushback grows.
“When I write these [investment] letters, it was never meant to be a political statement. … They were written to identify long-term issues to our long-term investors,” Fink said on Sunday.
BlackRock hasn’t just faced rhetoric over ESG but has also been hit financially for its embrace of the concept. Several Republican-led states have peeled back their ties to the firm, which is the world’s largest money manager.
For instance, Florida’s chief financial officer announced last year the state would divest some $2 billion from BlackRock, the largest such state divestment from BlackRock yet over its stance on ESG.
“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,” Florida CFO Jimmy Patronis said at the time.
South Carolina, Utah, Arkansas, Missouri, Louisiana, and other states have also divested or announced planned divestments of hundreds of millions of dollars from BlackRock and Fink.
During the Sunday conversation, Fink acknowledged that the Florida divestment hurt BlackRock but made a point of noting that despite the state divestments, last year was the best in the money manager’s history, featuring net flows of $200 billion from U.S. clients.
Following Fink’s remarks, Will Hild — the executive director of the conservative group Consumers’ Research, which has run a massive campaign against BlackRock — said Fink’s “scheme has been exposed, and he knows it.”
“Ignore his hollow backtracking. He and his ESG cronies (like [Bank of America] CEO Brian Moynihan) are intent on ‘forcing’ their far-left agenda onto the American people and their main tool is ESG,” Hild tweeted.
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