Larry Fink, the CEO of BlackRock, appears to know that his attempt to run the American economy, and to inflict his personal preferences on society from company headquarters, are at very least too obvious. And so he has been retreating from his grandest claims, at least rhetorically. His confused explanations as he withdraws from the van of the march, however, have simply underscored how untenable his position remains, and how large is the gap between his assertions and the truth.
The 2021 version of his annual letter to American CEOs read as a royal decree, complete with instructions to those CEOs about how they were to understand American politics and society:
Several months into the year, the pandemic collided with a wave of historic protests for racial justice in the United States and around the world. And more recently, it has exacerbated the political turmoil in the U.S. This month in the U.S., we saw political alienation – fueled by lies and political opportunism – erupt into violence. The events at the U.S. Capitol are a stark reminder of how vulnerable and how precious a democratic system can be.
No ambiguity here, and no nuance. You, CEOs, are to understand the seizure of downtown Seattle and the gutting of Kenosha as noble and peaceful demonstrations for justice, while a bunch of people walking mostly inside of velvet ropes in the Capitol after having the doors opened for them – that’s treason.
This was hardly subtle. Fink was telling American corporations that if they wanted BlackRock investments, they had to sign up for the hard-left worldview.
Then the country began to wake up to woke, and Fink discovered that his self-crowning, like Napoleon’s, had been both noticed and contemned. And so by the 2022 letter Larry had fallen back to an insistence that his demands on CEOs are neither woke nor partisan.
Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not “woke.” It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.
As has been discussed before in this space, Fink’s version of stakeholder capitalism is a very funny sort of capitalism, in that its whole purpose is to ignore the interests of the genuine capitalists (the people who invest in BlackRock, whose capital Larry is using) in favor of forcing his own politics on American corporations. And it’s a funny kind of “unwoke,” given that his continuing demands are the two highest woke priorities: equity-based discrimination and politicized carbon-elimination schedules that have already imperiled Europe and, if followed, will bankrupt the West for no possible climate-related purpose.
Now Fink is retreating even further, again rhetorically. His current claim, put forth at BlackRock’s annual shareholder meeting last week, is that he’s not pushing equity, decarbonization and the other – whoops! – demands of the woke fringe on his own behalf at all. No, rather he’s just doing it because BlackRock’s investors are demanding it. He reverted to the claim that he’s somehow acting for all shareholders by offering the non sequitur that companies must embrace equity-discrimination and political decarbonization because BlackRock had an up year in 2021: “Our voice is resonating with all our stakeholders, evidenced by our record 2021 business and financial results.”
Now, Larry Fink has founded a company that invests $10 trillion in assets, and has made himself a billionaire. He can’t be so dumb as to think that the fact that he makes money in any given year validates every decision he’s made in that year, far less the self-evidently absurd claim that companies must discriminate by race and sex and must endanger their future profitability and the survival of the world – and particularly the West, as we have seen in 2022 – because he made money last year. He must have heard of dependent and independent variables. We can therefore conclude that he still thinks either that the rest of us are very stupid indeed or that he’s still the self-crowned emperor, but simply must be ever-so-slightly less obvious about it.
In his next breaths, Fink himself underscored the fundamental fraud of his current position. About his seizure of his investors’ voice for his political purposes, he then said, “it is ultimately [investors’] choice. It is their choice where to allocate the money into what index, into what style, and we as a fiduciary will carry on their wishes.”
But wait. He and a colleague who spoke later repeatedly reaffirmed that BlackRock not only votes its investors’ proxies in favor of his personal policy preferences, whatever label he gives them, but that he and BlackRock also engage with other corporate executives outside of the proxy process to make sure that those companies adopt his policy preferences. Every syllable of that discussion revealed that when they “engage” in efforts to coerce other executives to adopt Fink and BlackRock’s deeply partisan policy goals, they do not negotiate on behalf of the fraction of BlackRock investments that are explicitly labeled ESG. No, they do it with the force of all $10 trillion of BlackRock’s investments. This seems to obviate his claim that he is respecting those “choices” by investors.
Fink later suggested that he really wishes that he could let all investors vote their own proxies, as he’s doing for his biggest investors, but that “there are significant regulatory and logistic hurdles to achieve this at the moment, and we encourage changes in this regulation so we can adapt this across all investors.” Ok. Well, what are those regulatory hurdles, so that we as investors can help you fight against them? What specifically are you doing to fight against them? (Heaven knows you’re not usually reticent when you wade into political and social controversies for “all stakeholders.”)
Most importantly: why in the world don’t you refrain from voting the proxies of those who still can’t vote their own, instead of using them to advance your favorite causes? That’s certainly within your power. And why don’t you make it clear each time you speak to a corporation to try to change its behavior that “the majority of our investors appear not to wish to see ESG developments at your company enough to make ESG-specific investments, so understand that we’re making these claims only on behalf of a minority of investors, and if we were honest we’d also and with more volume advocate the opposite, because that’s the preference that, so far as we can tell, most of our investors have expressed.”
While you’re at it, Larry, how can you use logistical impossibility as an excuse for not offering all investors the chance to vote their own proxies, by, say, 2024. Sure, it might not be possible, but neither are your decarbonization goals, certainly not without crushing the poor and middle class. As you yourself admitted at the shareholder meeting, you try to push decarbonization in a technologically feasible way where possible, but you do it regardless. After all, “as you can see, I’m very passionate about” net-zero carbon. Just so.
Fink’s story keeps changing, while his and BlackRock’s behavior appears to stay the same. But with every rhetorical retrenchment, the incoherence of his position becomes clearer.