More than two years after BlackRock encountered criticism from U.S. conservatives over its advocacy for sustainable investing, the world’s largest asset manager is changing the subject.
CEO Larry Fink hasn’t used the word “climate” on a conference call with analysts since January, and he didn’t use the word “climate” in his high-profile annual letter in March. , or mentioned the word green only eight times out of 11,000 words.
The $11.5 trillion asset manager has been working hard lately to emphasize its pension and infrastructure offerings. Fink headlined his March letter: “It’s time to rethink retirement,” and used variations of the word “retirement” 98 times. Back in 2020, companies mentioned retirement only twice in their letters to customers, but words related to sustainability appeared more than 60 times.
BlackRock has been touting its retirement efforts in high-profile U.S. political and economic newsletters, including this month’s campaign in Semaphore and Financial Times sister publication Ignites.
The group is also broadly discussing plans for Global Infrastructure Partners, the alternative asset manager it acquired for $12.5 billion earlier this year.
“This is a practical repositioning… that is really adapted to the American context,” said Pierre-Yves Gauthier, founder of research firm AlphaValue.
BlackRock said it was simply responding to what it was hearing from customers. It reported third-quarter capital inflows and assets under management at record highs, and its stock price hit a record high earlier this month.
“We focus our global business on the topics that matter most to our clients and are evolving to stay ahead of their needs. Over the past five years, these have included sustainability, retirement, infrastructure and more. BlackRock said, adding that it received approximately $2 trillion in net new business during the period.
The asset manager continues to offer sustainable investments to clients who want to invest, reaching a record $1 trillion in assets under management this year. The firm has also long been a big player in the retirement market, with half of its assets under management coming from various forms of pension pots, and is the largest independent manager of U.S. defined contribution plans, known as 401ks. .
Much of the recent infrastructure focus includes a high-profile $550 million investment in direct atmospheric carbon capture projects and a deal with Microsoft to build data centers and the energy needed to operate them. Includes decarbonization and green energy options, including a new $30 billion fund.
But the money management company has also made a concerted effort to change its external profile since Republican politicians began using it as a punching bag.
Starting in 2022, Texas, West Virginia and other states will place the company on boycott lists for being “hostile” to fossil fuels, and former presidential candidate Vivek Ramaswamy announced earlier this year that BlackRock Inc. He claimed that he was taking advantage of his power as a major shareholder in a U.S. company. To advance the agenda of “woke capitalism.”
BlackRock has hired John Kelly, formerly of Starbucks and Microsoft, as its new head of corporate affairs, and brought in Lee Farris, formerly of Carlyle and Goldman Sachs, to lead its communications division, including social media. Mr. Kelly also revamped the asset manager’s lobbying efforts in Washington and state governments, adding Joe Wall and Jane Moffat, two former Goldman Sachs hires.
Mr. Fink has also stepped up his personal courting of Republican officials, saying last year that he had stopped using the term ESG, which stands for the use of environmental, social and governance factors in investments, because it was too politicized.
He traveled to Texas in February to attend an energy investment summit. BlackRock announced that it has drawn in $53 billion in net new assets from institutional clients in Texas since the beginning of 2022, despite the official blacklist.
Analysts noted that BlackRock’s change in attitude coincides with several ongoing business innovations.
BlackRock announced a new retirement plan in April that seeks to provide answers to some of the retirement concerns that Mr. Fink highlighted in his letter a month ago.
Developed over four years, the LifePath Paycheck program makes it easier and cheaper for retirees with BlackRock 401k accounts to use a portion of their savings to purchase an annuity that provides a reliable income stream. .
Jason Kephart, a BlackRock analyst at Morningstar, said of sustainability: “It makes sense that they wouldn’t put more weight on the table.” “They haven’t solved the problem yet. . . . They just aren’t talking about it.”
“The call for resignation will reach more people without causing as much backlash,” he added.
At the same time, BlackRock is rolling out a “vote choice” program that gives customers more say in how they vote their company’s stock on proxy voting questions on climate and other issues. . Owners of less than a quarter of $2.8 trillion in eligible assets accepted BlackRock’s offer, underscoring the message that the company is doing what its customers want.
Support for BlackRock’s environmental and social shareholder proposals has plummeted from 47% in 2021 to 4% this year. The Stewardship Team attributes this decline to the prevalence of proposals that are too prescriptive or not in the financial interests of shareholders.
For clients who continue to seek sustainability, the group is introducing a new policy for climate-focused funds that explicitly considers efforts to limit the rise in global average temperatures to 1.5 degrees above pre-industrial levels. Developed an activist voting policy.
“Our job is to listen to our clients. . . . It’s their money, so our job is to respond to their wishes,” Fink said at a briefing earlier this month.
