Apparently true to its word – or at least virtue-signaling a head fake in that direction – mega-investor BlackRock put some companies in its portfolio on notice that their efforts to address transparency and mitigation regarding “climate change” are insufficient.
The $6.5 trillion firm announced earlier this week in a report that it had warned 244 of those companies that they insufficiently address climate concerns, and that it had voted against resolutions and directors at 53 of them because of those shortcomings. It warned the other 191 companies they “risk voting action in 2021 if they do not make substantial progress,” according to the Financial Times.
BlackRock first announced its plans to increase scrutiny of its investments, with regard to climate, in January.
Some of the names on BlackRock’s naughty list include fossil fuel-concentrated industries like ExxonMobil, Volvo, Daimler, and coal company Peabody Energy.
“Our approach on climate issues, in particular, is to focus our efforts on sectors and companies where climate change poses the greatest material risk to our clients’ investments,” BlockRock’s report said.
The posturing comes on the heels of the firm and other investment managers being told by the Department of Labor that its “green” initiatives – and other so-called “environmental, social and governance” (ESG) investment principles – are likely illegal. DOL announced the release of a proposed rule that explained that under the Employee Retirement Income Security Act of 1974 (ERISA), investors managing federal employees’ retirement investments may not subordinate maximization of financial returns to other purposes.
“Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan,” said Secretary of Labor Eugene Scalia. “Rather, ERISA plans should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers.”
BlackRock’s ESG, especially regarding climate change, coincides with a pressure campaign called “Stop the Money Pipeline,” led by radical environmental group 350.org.
“We demand that banks, asset managers and insurance companies stop funding, insuring and investing in climate destruction,” says the group’s website, which identifies BlackRock as one of its top targets.
CEO Larry Fink announced in January that BlackRock would increase its number of “sustainable” funds, divest some holdings in coal-related companies, and be more transparent about how it addresses climate in its investments. Now it’s conducting its own pressure campaign on the companies it invests in.
BlackRock has been called out for its ESG hypocrisy by National Legal and Policy Center, which urged Fink to divest from the 137 Chinese companies on American stock exchanges that it is invested in. In a May letter, NLPC President Peter Flaherty noted the firm’s China investments are controlled by the communist government, which abuse human rights, suppress and detain citizens, and caused a worldwide pandemic, among other atrocities. And Flaherty also pointed out that Fink doesn’t even hold China’s corporations to the same standards on climate that he expects of American companies.
“In light of your self-appointment as moral arbiter for corporate America, you cannot now pick and choose which moral imperatives you will honor and which you will ignore,” Flaherty wrote to Fink. “Unless BlackRock divests from Chinese companies, your ‘leadership’ will amount to empty virtue-signaling.”
Following NLPC’s effort, Republican Sens. Martha McSally (Arizona) and Kevin Cramer (North Dakota) asked Fink last month to explain apparent inconsistencies in the company’s approach to managing its funds. Specifically, the senators wanted to know why BlackRock’s U.S. investments are held to a higher standard as it pertains to appeasing activist investors with a progressive agenda, as opposed to its holdings in Chinese companies that do not comply with minimal legal and auditing standards.
Ed Hirs, an energy research fellow at the University of Houston, echoed NLPC and the Senators, and said if Fink tried to treat Chinese companies the same way he treats American ones, he’d suffer the consequences.
“BlackRock is betting on China as its next big growth opportunity and is hypocritically currying favor with the Chinese government, the ultimate management and owner of most Chinese firms listed on U.S. exchanges,” Hirs wrote for Forbes. “BlackRock’s access to Chinese firms and markets would certainly be curtailed if it pursued activist labor and climate shareholder votes against Chinese firms.”
And that appears to be Fink’s greatest “moral” concern.