Bill McKibben’s weekly newsletter gives us reason to take a closer look beyond the hype about one of the most influential investment firms in the world. He uses baseball to raise concern in a way that is clear, if you know a little about the sport:
The year is coming to an end, and all eyes are trained on D.C., as Joe Biden prepares to helm a venerable enterprise with a four-trillion-dollar budget. On the climate front, Biden’s team, which he announced last week, with Gina McCarthy, Deb Haaland, Jennifer Granholm, and John Kerry at the forefront, seems highly credible—a hundred-and-eighty-degree shift from the coterie of coal lobbyists and oil-industry operatives that have decorated the current Administration. Biden’s group has a real shot at getting Washington squarely in the global-warming fight. But, although that federal effort will doubtless occupy much of our attention in the year ahead, let’s close out 2020 by examining the de-facto government based on Wall Street. Its obvious head is BlackRock, the world’s largest asset manager, which is—just for purposes of scale—an eight-trillion-dollar enterprise, and the largest shareholder in almost every company that matters to the future of the Earth. BlackRock is a monetary heavy hitter.
To continue the baseball analogy, BlackRock finally stepped up to the climate plate this year. Larry Fink, the C.E.O., focussed his annual letter to investors on global warming, promising that henceforth sustainability would be at the heart of investment decisions. For that stand, Fink was recently named the first Institutional Investor of the Year—by Institutional Investor magazine. This encomium seems a little like awarding the season’s M.V.P. during spring training, simply because an intrepid player announces his plan to bat .400. In point of fact, BlackRock mostly whiffed on climate last year: the activist group Majority Action reports that, during proxy season, when BlackRock’s votes would have made a real difference, the firm voted to elect ninety-nine per cent of the directors proposed for boards at energy companies and utilities, even if the companies had made no serious climate commitments. The group also highlights that BlackRock supported just three of thirty-six “climate-critical resolutions” put to shareholders at S. & P. 500 companies—resolutions that might have curbed JPMorgan Chase’s lending to the fossil-fuel industry, or Duke Energy’s lobbying efforts. In half these cases, if BlackRock and its smaller competitor Vanguard had voted with the planet in mind, the resolutions would have passed. Fink didn’t bat .400, in other words—he batted below .100.
But winter is for the hot-stove league, the season when we dream of the glories ahead, and so BlackRock is promising to actually do some damage this year. Earlier this month, the company said that supporting investor resolutions will play an “increasingly important role in our stewardship efforts around sustainability.” Sandy Boss, the firm’s newly named head of investment stewardship, explained that, traditionally, BlackRock has given companies the “benefit of the doubt” regarding steps to slow global warming but there is a “sense of urgency now.” (Another new report from Majority Action, this one in collaboration with the Service Employees International Union, shows that BlackRock has been similarly laggard on issues of racial justice.) Some of that urgency doubtless comes from the new record global temperature that 2020 seems all but certain to set—but it surely also reflects the concerted campaigns by activists to force the investment giant to change its ways. BlackRock’s Big Problem, a network of organizations at the forefront of that effort, released a guardedly positive statement in response to Boss’s pledges, saying, “We are optimistic that this could potentially be the start of a much more productive and ambitious engagement strategy that results in real-world impacts—but it all depends on what BlackRock does next.”
Some of those next steps may be spurred by Washington, where BlackRock alums are populating the incoming Administration. Environmental groups (including, full disclosure, 350.org, which I helped found) issued a forthright and useful challenge last week to BlackRock’s former director of sustainable investing, Brian Deese, who will be Biden’s chief economic aide. It called on Deese to make “regulation of the financial industry’s contributions to the climate crisis and the related impacts on frontline communities a top priority for your role in the Biden Administration—even if it goes against the interests of your former employer.” (Further full disclosure—thanks to my occasional occupation as a Methodist Sunday-school teacher, I’ve known Deese and his wife for decades.) Indeed, there’s much that the Fed, the Treasury, the Securities and Exchange Commission, and other regulators can do to spur the clean-energy revolution.
But the groups in this fight also promise to keep a close eye on Wall Street: it’s not just BlackRock’s votes at shareholder meetings that count but, even more, the firm’s continued inclusion of fossil-fuel companies in the index funds where its passive-investment clients park their money. That’s the real ballgame: the world’s largest collection of money continues to behave as if the corporations rapidly destroying the planet are normal players. It’s time to scratch Exxon and their ilk from the lineup. An alternative—that will get more attention if these companies insist on playing the game by the old rules—is to break up the Yankees, I mean, BlackRock.
Read the whole newsletter here.