A small activist investor has taken a stake in BlackRock and is encouraging it to renege on its environmental, social and governance stance, as well as replace high-profileCEO Larry Fink.
Bluebell Capital Partners, a London-based firm with $250 million in assets under management, owns about 12,000 shares of BlackRock, or less than 0.01% of the company, valued at about $9 million.
Nonetheless, Bluebell is bullish asan investor and believes changes are needed at the world's largest asset manager with nearly $8 trillion in AUM as of Sept 30.
"As a shareholder in BlackRock, we are increasingly concerned about the reputational risk (including greenwashing risk) to which you have unreasonably exposed the Company potentially fuelling a gap between the 'talk' and the 'walk' on ESG investing; and the backlash caused by BlackRock's ESG strategy which has alienated clients and attracted an undesired level of negative publicity," Bluebell wrote in a Nov. 10 letter addressed to Mr. Fink and reviewed by Pensions & Investments.
Giuseppe Bivona, a partner and chief investment officer at Bluebell, likes BlackRock. It is the "undisputed leader in its sector" and has opportunites for growth in private markets and across geographies, Mr. Bivona told Pensions & Investments in an interview.
But "the franchise damage, if you ask us, has been done," he added.
Even if Mr. Fink became less outspoken about ESG, Mr. Bivona said Mr. Fink should still should be replaced.
The activist investor also highlighted that BlackRock has a succession problem.
"I think there's a lot of internal talent. I'd like to see a woman be the head of BlackRock," Mr. Bivona said. "You cannot get there if you don't make the case that we've been advocating for."
Mr. Fink has said he hopes the criticism he and BlackRock have drawn -- from both sides for and against ESG -- is a sign he's making the right choice.
In its letter, Bluebell called that "amateurish" and claims that approach alienates important clients and attracts negative publicity.
"You are not doing 'something right' for BlackRock's shareholders," Bluebell said in its letter, quoting Mr. Fink in one of his own earlier missives this year.
BlackRock remains the Wall Street asset manager most publicly under fire for its vocal and investment support of ESG, although its internal practices and voting record as a significant common shareholder of many companies show the firm is not all that revolutionary.
The latest data show BlackRock voted in favor of climate change shareholder proposals fewer times than many of its rival asset managers during this summer's proxy season.
In its letter, Bluebell argues it is contradictory and hypocritical for BlackRock to make a commitment on thermal coal limited to discretionary portfolios. The activist firm contends BlackRock should "proactively" market passive investment solutions including and excluding exposure to ESG-related risks such as thermal coal.
Bluebell also said in its letter that it has witnessed other investment decisions by BlackRock that it believes are inconsistent with its ESG stance and objectives.
"In the past 18 months, Bluebell has waged a number of campaigns to promote their climate and governance agenda. BlackRock Investment Stewardship did not support their campaigns as we did not consider them to be in the best economic interests of our clients," a BlackRock spokesman said in a statement about Bluebell's letter.
