Larry Fink and his team at BlackRock seem to have heard the growing roar of opposition to politicized investing that is emerging in the United States. While his 2022 public letter to CEOs features a heavy focus on climate change and decarbonization (as in years past), it opens with a defensive insistence that the company’s approach to stakeholder capitalism is not political or “woke.” Such a statement would not be necessary if Fink and his allies were not feeling the heat from shareholder activists opposed to the embrace of progressive-left social policies that, contra Fink’s insistence, are inherently political.
The rhetorical backpedaling is even apparent on Fink’s own favorite topic—climate. Over the past year, skeptics of climate policy (including the policy of a net-zero target for greenhouse gas emissions), have highlighted the problems with the aggressive policy path we see in, for example, the European Union. Energy reliability is falling and energy prices are skyrocketing. Traditional energy sources are being phased out without sufficient baseload capacity being developed to replace them.
This year’s letter—which seems like a response to such criticisms—contains several caveats that climate activists generally prefer not to acknowledge. Fink writes that, “green products often come at a higher cost today,” and acknowledges that “traditional fossil fuels like natural gas will play an important role” during the future energy transition, and that “governments and companies must ensure that people continue to have access to reliable and affordable energy sources.” Refusing to address continuing demand for fossil fuels “will drive up energy prices for those who can least afford it.” That’s a far more reasonable approach than the investing public has generally seen from institutions that place climate change at the top of their list of priorities.
Fink’s annual letters are addressed to CEOs and BlackRock shareholders, but their public nature means that they’re probably intended for a much wider audience, including politicians and other policy makers. Having borne the brunt of much public criticism, including just this week by the treasurer of West Virginia, Fink’s team seem to have decided that it was time to dial back the controversial political positions and focus on more traditional business concerns. It was only a year ago, after all, that Fink’s letters to CEOs and shareholders ham-fistedly tried to tie climate change to the COVID-19 epidemic. As I wrote at the time:
Observed changes in weather patterns are certainly worth paying attention to, but the idea that focusing on what the average global temperature will be in 2100 is somehow the responsible way to respond to an infectious disease epidemic still raging in 2021 verges on parody.
Public pressure on BlackRock to go “back to neutral” when it comes to political controversies (like this April 2020 open letter) are having an impact. Larry Fink’s own public statements now seem to confirm it.