Published: 01/18/2022
By: SWFI Institute
BlackRock is the world’s largest asset manager, surpassing US$ 10 trillion in assets under management. However, various special interest groups continue to tinker and influence both asset managers and asset owners. The most notable push is for asset managers and asset owners to embrace not investing in fossil fuels such as coal, oil, and gas.
On January 17, 2022, West Virginia State Treasurer Riley Moore announced the Board of Treasury Investments, which manages the state’s roughly US$ 8 billion operating funds, will no longer use a BlackRock Inc. investment fund as part of its banking transactions. The State Treasurer found that in recent reports that BlackRock had urged companies to embrace “net zero” investment strategies that would harm the coal, oil, and natural gas industries. States like West Virginia, Texas, Pennsylvania, Oklahoma, and others rely on the fossil fuel revenue for jobs and tax receipts.
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The State Treasurer also found in the reports that BlackRock has been increasing investments in Chinese companies that subvert U.S. national interests and allegedly damage West Virginia’s manufacturing base and job market. State Treasurer Moore highlighted significant financial risks associated with firms that invest heavily in China, “due to that country’s lack of free market protections, intellectual property rights and outright government interference in markets and business activities,” according to the press release.
“The Chinese government’s blatant interference and controls over businesses and markets creates a tremendous amount of uncertainty and risk for anyone attempting to invest there,” Treasurer Moore said.
In 2021, BlackRock became the first foreign-owned company to operate a wholly owned business in China’s mutual fund industry.
The press release also states, “BlackRock has been criticized for investing in some Chinese companies that have been identified by the U.S. Department of Commerce as “acting contrary to the foreign policy interests of the United States.”
“BlackRock CEO Larry Fink has been outspoken in pressuring corporate leaders to commit to investment goals that will undermine reliable energy sources like coal, natural gas and oil under the guise of helping the planet, but at the same time he’s pouring billions in new capital into China, turning a blind eye to abhorrent human rights violations, genocide and that country’s role in creating the COVID-19 global pandemic,” Treasurer Moore said. “Even liberal financier George Soros has said BlackRock’s China investments are ‘a tragic mistake’ that could potentially damage our national security.”
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According to SWFI fund transaction data, many U.S. public pension plans are users of BlackRock’s investment products, especially in the passive investment space. BlackRock competes in this space against State Street, Northern Trust, Invesco, Vanguard, and Wellington Management Company.
Stakeholder Capitalism
In his widely followed annual letter to corporate leaders, entitled “The Power of Capitalism,” BlackRock CEO Larry Fink argued about accusations the asset manager was using its weight and influence to support a progressive, left-wing agenda. In recent years, Fink’s letter has focused on a range of issues, from boardroom diversity to climate change issues. BlackRock has also faced criticism from the left-wing on not doing enough to divest from fossil fuels.
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” Fink said.
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