BlackRock CEO Larry Fink has issued a warning to corporate America about the alleged threat to investments that “climate change” poses.
Speaking to investors on Wednesday, Fink warned that his asset management company views climate change as a “risk” to portfolio companies.
Alongside rival asset management firms State Street and Vanguard, BlackRock maintains an average 20% stake in every Fortune 500 company.
In his annual letter to investors, Fink claims that he desires to take a “long-term view of what will impact returns.”
Fink contends that firms should seriously account for the alleged impact of climate change.
“For years now, we have viewed climate risk as an investment risk,” Fink writes.
“That’s still the case,” he asserts.
“Anyone can see the impact of climate change in the natural disasters in California or Florida, in Pakistan, across Europe and Australia, and in many other places around the world.
“There’s more flooding, more wildfires, and more intense storms.
“In fact, it’s hard to find a part of our ecology, or our economy, that’s not affected.
“Finance is not immune to these changes.”
BlackRock is a leading proponent of the “woke” environmental, social, and corporate governance movement, also known as ESG.
Critics argue that ESG mingles political and social causes, such as decreasing carbon emissions and achieving racial diversity in a manner that compromises or distracts from profitability.
Among the most high-profile critics of ESG is Elon Musk, who recently slammed the movement as ‘Satanic.”
Fink insists that BlackRock respects client choices with respect to climate investments, citing proxy voting rights the company recently extended to large investors.
He added that the “transition to a low-carbon economy is top of mind for many of our clients.”
However, he also claimed that “as minority shareholders, it’s not our place to be telling companies what to do.”
According to an investment stewardship report, BlackRock has nevertheless taken “voting action on climate issues” against dozens of portfolio companies.
One small ESG firm recently gained three board seats at ExxonMobil with the aid of BlackRock, Vanguard, and State Street.
Fink added that BlackRock desires to “provide insights into how a changing climate and the transition may affect portfolios” over time.
“These clients track the transition to lower carbon emissions just as they track any other driver of investment risk,” he remarked.
“They want our help to understand the likely future paths of carbon emissions, how government policy will impact these paths, and what that means in terms of investment risks and opportunities.
“It is not the role of an asset manager like BlackRock to engineer a particular outcome in the economy, and we don’t know the ultimate path and timing of the transition.”
According to BlackRock’s most recent earnings report, the firm’s assets under management declined from $10.0 trillion in the fourth quarter of 2021 to $8.6 trillion in the fourth quarter of 2022.
In response, the “woke” company fired several hundred workers and paused most new hires.
Skeptics of the ESG movement say the recent poor performance of ESG funds over the past year discredits the investment approach.
Technology stocks, which score highly in ESG ratings due to the underlying companies’ involvement in social issues, have fallen behind outsized profitability from energy stocks, which rank poorly due to worries regarding carbon emissions.
Fink has meanwhile rebuked skepticism toward ESG voiced by some business leaders and conservative lawmakers.
“Let’s be clear, the narrative is ugly, the narrative is creating this huge polarization,” he said at the World Economic Forum (WEF) annual event earlier this year.
“We are doing everything we can to change the narrative.”