Commentary
I was amused to read the
Annual Letter to CEOs from BlackRock’s Larry Fink, his yearly missive to companies in which the investment manager has a stake.
Fink seems to marvel that “It’s been two years since I wrote that climate risk is investment risk. And in that short period, we have seen a tectonic shift of capital. Sustainable investments have now reached $4 trillion.”
The
pronouncement he cites from two years prior (February 2020) that triggered the “tectonic shift,” says: “The past year has seen a marked shift in society’s attitudes toward sustainability. This shift is spurring political pressure, a regulatory push and technological advancements to create the foundations of a more sustainable world, leading to a change in investor behavior and setting in motion a major yet gradual capital reallocation.”
“Well, duh!” He caused it!
Fink is a classic rent-seeker, and his estimated $9.5 trillion (with a “T”) under management allows him considerable influence in companies in which BlackRock has an investment, as well as government.
As business journalist
Charlie Gasparino put it, “Fink … [is] a key player in the Democratic Party. And he hasn’t been bashful in deploying BlackRock’s clout to advance Democratic economic causes in ways that happen to support its bottom line.”
Fink’s feigned surprise at the “tectonic shift of capital” toward Environmental, Social, and Government (“ESG”) investing and the “shift in society’s attitudes toward sustainability” is rather like Pope Francis expressing surprise at Catholics’ attitudes toward some act he has deemed to be a mortal sin.
Forgive me if I am skeptical of Mr. Fink’s sincerity. He’s certainly not putting his money where his mouth is. As the first foreign fund manager to have 100 percent control of an equity fund in communist China, Fink and BlackRock are investing in the
world’s largest carbon polluter—one that pumped out 10,065 million tons of CO2 in 2019, nearly twice what the United States exudes. And while America has reduced its carbon emissions in the last 20 years,
China’s emissions have skyrocketed.
And skepticism should trigger inquiry.
BlackRock investors, including a number of government employee pension funds, shouldn’t hesitate to ask Fink just how high a priority he gives his climate sustainability program. That’s because among U.S. adults
surveyed by the Pew Research Center, climate change ranked fifth from last, with just 38 percent of respondents giving it their highest priority for 2021. And that low priority came along a deep 45 percentage point partisan divide between Republicans and Democrats—with only 14 percent of Republicans believing that climate change should be the first priority for Congress and the president to address, while 59 percent of Democrats think it should be.
Given Fink’s stated concerns about climate, the pension fund managers for industrial unions, like the Teamsters, the United Auto Workers, and the United Mine Workers—whose plan participants have all suffered from the kind of globalization Fink and BlackRock have long supported—should ask Fink whether he might subscribe to something akin to the
Carbon Border Adjustment Mechanism (CBAM).
The CBAM would apply a carbon levy, or tariff, on imports of certain goods from countries, like China, that tend to be less concerned with reducing carbon emissions. A
CBAM proposal is before the European Parliament to address the same concerns as Fink’s and would incentivize foreign governments to address carbon emissions more aggressively to boost exports. Perhaps Fink could advocate for a similar proposal in Washington among his many friends in Congress and the White House?
Somehow, I’m afraid Fink’s statements about “stakeholder capitalism” and carbon neutrality ring hollow when one considers his vested financial interest in President Joe Biden’s “Green New Deal,” which his people helped write, and his big bet on China—one which triggered a warning from
Consumers’ Research.
Consumer’s Research
said, “BlackRock’s unabashed gusto for Chinese markets flies in the face of concerns about China’s ascendant standing in the world, its authoritarian model of government, and its ambitions to supplant the U.S. as the pre-eminent world power.”
“Stakeholder capitalism,” the phrase Fink aspires as a model for his portfolio model, would hopefully acknowledge the need to reject authoritarian government and U.S. subsidiarity to a communist, dictatorial regime as “societal issues intrinsic to our companies’ long-term success,” and one on which Fink thinks stakeholders should hear from CEOs, according to his letter.
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