Larry Fink’s Letter to CEOs Says Stakeholder Capitalism Is Not ‘Woke’

Much of this year’s letter was devoted to Mr. Fink’s belief that a focus on environmental, social and corporate governance issues — E.S.G., for short — does not conflict with making money. Reducing a company’s carbon footprint, for example, makes the business more resilient in the long term, which is in investors’ interests.

“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,” Mr. Fink wrote.

He suggested that E.S.G. was not a fad but a permanent feature of the corporate world. Business leaders who do not adapt to the new reality, he suggested, risk being overtaken by younger and more innovative rivals in step with the times.

“Capital markets have allowed companies and countries to flourish. But access to capital is not a right,” he wrote. “It is a privilege. And the duty to attract that capital in a responsible and sustainable way lies with you.”

But some critics say Mr. Fink and BlackRock are not pushing companies hard enough to go green. Environmental groups have called out what they see as shortcomings in Mr. Fink’s approach: BlackRock’s Big Problem, a collection of nonprofits and other advocates, accuses the firm of failing to exclude major polluters from its investment funds, even in E.S.G.-focused products.

In his latest letter, Mr. Fink defended his more gradual approach, including a refusal to force BlackRock to divest holdings in fossil-fuel companies. (He has said in the past that the firm cannot rid many of its mainstream funds of holdings in companies that are part of major stock indexes.)

“Divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” he wrote. Focusing solely on cutting down on the supply of oil and gas, and not reducing the demand for fossil fuels, would simply drive up energy prices and encourage more of a backlash against green-energy efforts, he argued.

Article source: https://www.nytimes.com/2022/01/17/business/dealbook/larry-fink-blackrock-letter.html