6.3 trillion reasons Blackrock isn’t worried

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Student activist, David Hogg, has added to his seemingly never ending list of firms to boycott. Yet again, the impetuousness of youth made him misunderstand the very nature of the business he is attacking. Yes, some Blackrock funds hold gun makers for the sake of index tracking. Some ESG related funds don’t. Clients of Blackrock and other funds get to choose what products they wish to invest in.

Paraphrasing what Blackrock’s Larry Fink said to CNBC on the matter, “we are just custodians of our client’s money. They decide what they wish to invest into and they can select from products that don’t hold gun manufacturers.

Fink said the feedback from clients was a 95/5 ratio in favour of what Blackrock is doing with respect to investment offerings. As a $6.3 trillion AUM asset manager one wonders how much impact this boycott will have. If history is a guide then Blackrock and other funds will no doubt see a boost to assets under management thanks to Hogg’s boycott.

Or perhaps Fink should offer him an internship to learn about ESG.

One comment

  1. Mike, I am no fan of David Hogg’s ill-informed approach, but Larry Fink cant have it both way either.

    If Blackrock are simply custodians for clients money, then how can Larry Fink justify using the combined weight of these same clients money to pressure companies to be more “socially conscious” and address issues like “climate change?”

    The Big 4 Index Managers have been competing for the virtue signalling gold medal, and if they felt strongly enough about issues like gun control, they could easily have had indexes created that exclude those stocks …after all there are more indexes than stocks already. Why stop at guns, what about suppliers of materials, retailers, transport companies involved in the ecosystem of selling guns. Then again, why stop at guns, what about pharmaceutical companies peddling opioids?

    The reason Blackrock and their peers haven’t forced their agenda on their clients is that the uptake of ESG products has been dismal, and generates little revenue. Much like some of your articles on Climate Change been at odds with what cars (trucks) Americans buy.

    David Hogg is a kid, and hopefully will work out how the world works as he grows older. Unelected CEO’s of financial institutions deciding what social issues to pursue, and using the weight of client money to force them on companies behaviour is a dangerous road to go down in my opinion.

    Liked by 1 person

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