BlackRock's Fink defends push for companies to value more than profits

Larry Fink, chief executive of the world's biggest asset manager BlackRock Inc, late on Monday defended a shareholder movement that pushes companies to focus on the interests of society as well as profits.

In his annual open letter, Fink built on themes he has sounded in previous January missives to other CEOs, calling on them to find a purpose and to take account of issues like climate change as part of so-called stakeholder capitalism.

"Stakeholder capitalism is not about politics," Fink said in a letter, titled The Power of Capitalism. "It is not 'woke.' It is capitalism."

Fink also defended BlackRock's stance in engaging with companies on carbon transition rather than divesting altogether, saying the companies themselves cannot be the "climate police" but instead should work with governments "Divesting from entire sectors – or simply passing carbon-intensive assets from public markets to private markets – will not get the world to net zero," he said.

Overseeing a milestone $10 trillion as of Dec. 31, the world's largest asset manager has become one of the most influential voices in U.S. and European boardrooms, making Fink's annual letter a director must-read.

After years of criticism from activists focused on climate and other environmental, social and governance (ESG) issues, BlackRock changed course in 2021 and cast a much more critical set of proxy votes such as backing calls for things like emissions reports or the disclosure of workforce diversity data.

At the same time the fund manager has faced challenges from conservative U.S. politicians. On Monday, West Virginia State Treasurer Riley Moore said his agency would no longer use a BlackRock liquidity fund, where it last kept $21.8 million as of Jan. 6.

In a press release, Moore cited BlackRock's dealings in China and noted "that BlackRock has urged companies to embrace 'net zero' investment strategies that would harm the coal, oil and natural gas industries."

A BlackRock spokesman declined comment. The company in December acknowledged some continued fossil-fuel investment will be needed.