More than two years following widespread criticism from US conservatives over its stance on sustainable investing, BlackRock, the world’s largest asset manager, is shifting its narrative. Chief Executive Larry Fink has notably refrained from using the term “climate” in analyst calls since January and referenced climate-related topics only eight times in his annual letter in March, which spanned 11,000 words.
Currently, the $11.5 trillion firm is concentrating on promoting its pension and infrastructure services. Fink titled his March letter “time to rethink retirement,” discussing retirement themes 98 times, in contrast to only twice in his 2020 letter that heavily emphasized sustainability, mentioned over 60 times.
BlackRock has launched advertising campaigns focusing on its retirement efforts in prominent political and financial newsletters, including Semafor and the Financial Times’ sister publication, Ignites. Additionally, the firm is actively discussing its Global Infrastructure Partners, an alternative asset manager acquisition valued at $12.5 billion earlier this year.
Pierre-Yves Gauthier, founder of the research firm AlphaValue, described this move as a “practical repositioning” in response to the US context. BlackRock, which reported record inflows and assets under management for the third quarter, emphasized that it responds to client feedback. Over the past five years, the company has concentrated on themes like sustainability, retirement, and infrastructure, resulting in nearly $2 trillion in net new business.
Though BlackRock continues to provide sustainable investment options, which have reached a record $1 trillion in assets under management this year, its focus remains on the retirement market. The firm has long been a leader in managing various pension funds and is the largest independent manager of US defined contribution plans, such as 401ks.
Recent efforts in infrastructure emphasize decarbonization and green energy projects, including a notable $550 million investment in a direct air carbon capture initiative and a new $30 billion partnership with Microsoft to develop data centers and supporting energy needs. Nonetheless, BlackRock has been actively working to reshape its external image amid heightened scrutiny from Republican politicians.
Since 2022, states like Texas and West Virginia have boycotted the company over perceived anti-fossil fuel stances, and political figures such as Vivek Ramaswamy have accused BlackRock of promoting “woke capitalism.” In response, BlackRock appointed John Kelly, a former executive from Starbucks and Microsoft, as the head of corporate affairs, and he brought on Leigh Farris for communications and revamped lobbying efforts with hires from Goldman Sachs.
Larry Fink has also increased engagements with Republican officials and stopped using the term ESG due to its politicization. Despite challenges, BlackRock has secured $53 billion in net new assets from Texas institutional clients since 2022, notwithstanding its inclusion on state blacklists.
BlackRock’s tone adjustment coincides with business innovations already in progress. In April, the company launched the “LifePath Paycheck” program, which facilitates retirees with BlackRock 401k plans to purchase annuities for a guaranteed income flow.
Analyst Jason Kephart from Morningstar expressed approval of BlackRock’s reduced emphasis on sustainability, noting that while the company has not abandoned these initiatives, it has shifted focus. BlackRock’s new outreach on retirement is seen as less controversial and more engaging.
Simultaneously, the firm is rolling out a “Voting Choice” program, enabling clients to determine how their shares are voted on proxy issues like climate change. The uptake has been limited to less than one-quarter of eligible assets, emphasizing BlackRock’s commitment to aligning with client preferences.
Support for environmental and social shareholder proposals by BlackRock has dropped from 47 percent in 2021 to 4 percent this year, attributed to proposals being overly prescriptive or not serving shareholders’ financial interests. For clients seeking sustainability, BlackRock has introduced a voting policy for climate funds targeting a global temperature rise limited to 1.5C above pre-industrial levels.
Fink reiterated the company’s dedication to client desires, highlighting at a recent conference that their responsibility is to be responsive to clients’ needs as it is their money being managed.
