BlackRock CEO Larry Fink said he no longer uses the term "ESG" — shorthand for environmental, social and governance — due to the growing political backlash against the concept in investing.
During a fireside chat with David M. Rubenstein, co-chairman of global private equity firm The Carlyle Group, at the Aspen Ideas Festival on Sunday, Mr. Fink said the term has been “entirely weaponized” by both the “far left” and the “far right,” according to an audio recording of the conversation.
"I'm not blaming one side or the other, but it has been totally weaponized," Mr. Fink said. "In my last CEO letter, the phrase ESG was not uttered once, because it's been unfortunately politicized and weaponized."
The comments represent something of an about-face for Mr. Fink, who, along with his firm, have become the face of ESG investing over the past several years. But BlackRock has increasingly come under fire from politicians and activists on both sides of the aisle, who have alternately accused Mr. Fink and his firm of pushing a "woke" agenda and harming the oil and gas industry, and not doing enough to divest from fossil fuels.
Republican governors and other state officials have pulled billions of dollars in public pension funds out of BlackRock to punish it for its ESG efforts, while activists on the left have increasingly targeted BlackRock and its executives with public protests against the firm's climate impact.
Earlier this year, BlackRock began providing home security services, including security guards and improved home security systems, to both Mr. Fink and President Rob Kapito, citing "potential threats to their safety that have originated in connection with their roles."
Mr. Fink told Mr. Rubenstein that BlackRock's business had lost $4 billion in mandates as a result of the political debate over ESG investing, which he described as "90% misinformation."
However, Mr. Fink stressed that the money the firm lost from Republican states was more than made up for by other institutional inflows.
"We had one of the best years ever," Mr. Fink said of 2022. "But I'm ashamed of being part of this conversation. When I write these (CEO) letters, it was never meant to be a political statement. I don't believe they were written as a political statement. They were written to identify long-term issues for our long-term investors."
Mr. Fink later walked back his statement that he was "ashamed" to be part of the ESG debate in response to a question from a reporter.
"I write about stakeholder capitalism, and I'm a big believer that you have to focus on all of your stakeholders," Mr. Fink said. "So, there's nothing to be ashamed about (ESG). I just don't use the word ESG anymore. I'm not going to use the word ESG because it's been misused by the far left and the far right."
When asked to clarify how the term had been misused by the far left, Mr. Fink said: "They don't care that it's not my money. They're asking us to do things that we're not permitted to do, and they would like us … to decarbonize," Mr. Fink said. "That's not my money. I mean, if our client wants to decarbonize, we're willing to work with them and help them in that pathway. We're investing in more decarbonization technology than we ever had in the last two years. But we've worked with our asset owners in blue states and red states and our job is to be working with them and helping them build a long-term solution."
During the wide-ranging conversation, Mr. Fink stressed that BlackRock's focus was on the long term, telling the audience that 55% of BlackRock's $9.1 trillion in assets under management is retirement assets.
"The problem is most of the narrative and financial markets is the tick-tock of the day," Mr. Fink said. "The financial media always talks about the hot trade, the great thing to hear, where you should put your money — none of that matters for long-term investing like retirement."
"The reality is, if the markets go up or down any one year, it has very little bearing if your liability is a 30-year liability of retirement," Mr. Fink added. "That was the fundamental foundation of all the 12 (CEO) letters that I wrote so far, which were all about long-term issues that I believe would impact positively to all the owners of our assets."
