“The public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose.” That's what BlackRock boss Larry Fink wrote six months ago. In his annual letter to major leaders, he advocated the benefits of "sustainable capitalism", focused on long-term logic.
Such advocacy, when carried out by the world's largest asset manager with more than $6.3 trillion in assets, is not anecdotal. His written remarks made an impact and have since been widely commented on in economic and financial circles. But also in civil society.
BlackRock not leading by example
Environmental NGOs have taken Larry Fink at his word. Three of them - Friends of the Earth United States, The Sunrise Project and Amazon Watch – scrutinised the company’s own impact on society, focusing on climate policy as one of the asset manager's major challenges in terms of social impact. The results, published 24 May in a white paper, show that the investor is far from setting a good example.
According to the NGOs, BlackRock remains one of the most active investors in the coal economy — the main driver of climate change — either through investments in the development of new power plants or mines. It is the second largest investor in this economy after the Indian government.
Such a paradox given that Fink explained just last year that coal was "dead". A logic that resides in the fact that the fund manager practices passive management for the most part, meaning, activity in existing stock market indices (CAC40, Footsie, Dow Jones ...), that are very carbon-heavy.
Another harmful activity for the planet, including the climate: deforestation. Yet BlackRock remains one of the riskiest American investors with $600 million invested in commodities such as palm oil, rubber, wood or pulp, say the NGOs.
Little support for climate resolutions
Certainly, BlackRock has always defended a policy of shareholder engagement, highlighting the importance of its financial weight to advance the companies in which it invests. But in his letter, Fink also stressed that BlackRock "would not hesitate to exercise its right to vote, against the recommendations of management", in case progress is non-existent or deemed insufficient. However, this is not current practice.
In 2017, BlackRock supported only 9% of the major climate resolutions (including those of Exxon and Occidental Petroleum, which were the most publicised). They only supported 14% of resolutions calling for corporate strategy alignment with the 2°C objectives brought about by the Paris Agreement. An agreement to which Larry Fink has yet to explicitly support.
Béatrice Héraud @beatriceheraud