Recently, climate activists with pitchforks and lumps of coal stormed the New York City headquarters of one of the largest asset management companies in the world, BlackRock. With signs reading “#TaxTheRich” and “Green Housing for All,” demonstrators accused the company of not doing enough to curb climate change.
I would argue they’ve done too much.
In 2020, BlackRock CEO Larry Fink sent a letter to its shareholders outlining a new “enlightened,” investment approach which placed climate change at the helm. In the letter, Fink even goes so far as to say it would become “a defining factor in companies’ long-term prospects” and would vote to remove proxy voters when its leaders and directors were not making sustainably related progress.
But this is a problem for many of BlackRock’s clients — especially those located in states such as West Virginia, Texas and Louisiana whose economies rely on the oil and natural gas industries.
You would think such a stance would make BlackRock the darling of progressives. You’d be wrong. Progressive state money managers are criticizing BlackRock for not running further to the left at the expense of their own shareholders — particularly firefighters, teachers, police officers and government employees.
Take New York City’s chief financial officer, Brad Lander, for example, who seems to be more focused on becoming the city’s chief climate officer. In a letter addressed to Fink, Lander cites his commitment to achieving a net zero portfolio by 2024 for the city’s nearly $250 billion in assets — $43 billion of which rest in BlackRock holdings.
Rather than pressing Fink to maximize shareholder value to ensure retirees have the funds they expect and need when they retire, Lander pushes for BlackRock to publish its plan to implement Net Zero emissions, detail how they will eliminate fossil fuel use, support policies that require companies to disclose “anti-climate change” lobbying, and end bank lending on new oil and gas exploration.
Unfortunately for Americans already facing high inflation, less investment in oil and gas exploration also will bump the price at the pump even further. Firefighters, police officers, teachers and government employees must have confidence their money managers are acting in their best interest, not trying to whitewash woke Environmental, Social, and Corporate Governance (ESG) policies. But these shareholders are not powerless.
The solution starts with the states. This year, many state treasurers and legislatures took steps to better align pension fund investments with their states’ economic interests. In August, Texas comptroller Glenn Heger announced he would seek to divest holdings in BlackRock after determining they were boycotting energy companies. In similar fashion, South Carolina, Utah and Louisiana state leaders announced they would divest more than $200 million, $100 million and $800 million, respectively, in BlackRock holdings by the end of the year.
Electing state treasurers who will manage your money with a sole focus on creating shareholder value has never been more important. Your and your family’s retirement may depend on it.
Jill Homan is a resident of Johnston County, mom of two and owner of an investment firm.