After 19 Attorneys General singled out BlackRock for their Environmental, Social, and Governance (ESG) activism, the world’s largest asset manager shot back and rebuked them for misleading the public about their business practices. But BlackRock—whose CEO Larry Fink once said companies “have to force behavior”—is forcing ESG onto clients and leaving a path of destruction.
“We do not . . . dictate to companies what specific emission targets they should meet or what type of political lobbying they should pursue,” the company responded in a letter dated August 4th.
BlackRock insists they aren’t forcing the boycott of fossil fuel investments, but their actions suggest otherwise. Fink claimed in 2020 that their clients were primarily focused on fighting climate change. In a recent company sustainability report, BlackRock outlined how they will hold companies accountable if they fail to disclose climate-related risks or adopt ESG metrics like net-zero. The company added companies that forgo ESG investments “face material financial risks in the transition to a low-carbon economy.”
In response to forcing companies to align their investment strategy with climate goals à la the Paris Climate Accords or the Biden administration forcing the transition to net-zero, red states have responded by banning BlackRock from having access to state pension funds. Texas first called the ESG evangelist’s bluff and recently restricted hundreds of companies, including BlackRock, from state contracts for boycotting fossil fuel investments. West Virginia followed with its Restricted Financial Institution List barring the financial institution from state contracts for discriminating against its coal and oil industries. Florida also contributed to combatting woke capitalism by barring ESG considerations from state pension investments going forward.
Despite lauding its commitment to ESG integration, the “virtuous” asset manager selectively applies ESG principles depending on the country.
Black Rock is keen on “forcing behaviors” in the United States relating to sustainability risks, especially net-zero policies, but is reluctant to hold the world’s biggest polluter, China, accountable by judging them on the same strident standards. Thereby, being in clear violation of its fiduciary duty.
Why is that? As of February 2022, BlackRock was revealed to be a major investor in PetroChina— a state-owned oil and gas company under the purview of the China National Petroleum Corporation. It owns a 5.7% stake in the CCP-backed company.
Louisiana Attorney General Jeff Landry determined the company may have used its proxy voting rights as Exxon Mobil’s second-largest shareholder to force them to eliminate oil production. But here’s the catch: They weren’t transparent about the relinquished Exxon-owned oil fields soon being acquired by PetroChina—Asia’s largest producer of fossil fuels that BlackRock wants to phase out in the U.S. This move is not only a conflict of interest but an inconsistent application of their ESG criteria in investments. Par for the course for ESG virtue signalers.
Investors Against Genocide equally sounded the alarm over BlackRock’s hypocrisy with compliance pertaining to forcing ESG standards on their clients. The group pointed out the company willingly turns a blind eye to China’s human rights abuses against the Uyghurs. Opposing human rights abuses, including genocide, is an “inherent risk factor” per the UN Principles for Responsible Investment (PRI), a pledge BlackRock signed onto in 2008.
The virtue-signaling asset manager is in no position to lecture consumers and clients about ethical investing given the hypocritical behavior it has displayed. BlackRock would be wise to reassess its ESG practices and refocus on its original mission statement.