By Nancy Mancias, CODEPINK
It's 2021. Happy New Year.
The new year is not only a time for resolutions and new diet commitments, but it's also time for the publication of BlackRock CEO Larry Fink's annual letter to CEOs. Now, this isn't just any letter. It's the letter that lets the world know what's going on in Larry's mind. Never mind that most essential workers don't earn a livable wage or that 5.1 million American workers continue to receive jobless benefits. Fink continues to put forth his stupid letter while operating in a vacuum, only coming up for air to make slight mentions about the pandemic, Capitol riots, and economic crisis.
Larry Fink kicks off his letter with his typical mantra, "it's not our money," blaming the client for making BlackRock the keeper of the purse. Admittedly, there have been advances in green investment; however, this is not BlackRock's doing. Activist leaders like Greta Thunberg brought it about. What's missing from his annual letter is the millions of dollars BlackRock gained and benefited from the pandemic while appointed to help with the bailout. Fink's head is in the clouds if he honestly believes that capitalism will save the planet and humanity. At the root, capitalism is the cause of climate change, war, and migration. While he makes a clarion call for people over profits, it rings hollow since at the core of BlackRock's business model is to maximize return on investment.
However, there comes a time when demands need to be placed on capitalism. If BlackRock wants to question the E and S of its ESG discourse, it can insert several actions into its internal conversations. BlackRock can follow through on its ambitious rhetoric around sustainable investing and racial equity with these demands:
- BlackRock must pressure index creators to develop versions of their indices that exclude war-based firms and then use these indices as the benchmarks for its funds. When more than two-thirds of BlackRock's assets under management lie in index funds, using passive investing as a bogeyman for inaction is unacceptable. Index providers have already ramped up climate change-based index offerings over the last few years and can do the same with war-based firms.
- BlackRock must work with 401(k) administrators to make funds that exclude violence-based companies the default option for all retirement plans. The general public's retirement security should not depend on industries that profit from war, killing, and detention simply because ESG-friendly funds offer additional steps to select if available and are more expensive.
- Relatedly, BlackRock must charge the same expense ratios for funds that exclude weapons manufacturers as traditional funds. Investors should not be trusted and therefore discouraged from making peace a priority.
- BlackRock must exclude companies that profit from violence from all of its ESG products. This seems obvious but is not currently the case. For example, Raytheon should not be a holding in the iShares ESG Aware MSCI USA ETF product.
- BlackRock must commit to divesting its actively managed funds from both publicly listed and privately held weapons manufacturers. This applies to both equity and fixed-income securities.
- BlackRock must wield its shareholder power to push companies to cease business activities that profit from violence. For example, BlackRock can use its influence as a top ten shareholder of General Dynamics to advocate the company to end its contracts with migrant detention centers.
- Finally, BlackRock must educate and guide pension fund clients to build portfolios that remove violent companies from public sector workers' retirement funds. As the largest custodians of ordinary people's wealth, some pension funds like New York Cities have already divested from private prisons, and BlackRock can use its advisory arm to make this more widespread.
BlackRock needs to make a swift transformation. These demands listed above will bring good rather than harm. Agreeably, climate change has come home to roost on American doorsteps, but it's BlackRock's investments that have stimulated the increase of this change. Nevertheless, Larry Fink's belief in capitalism's power will only destroy the planet and humanity and not save it.
