Good morning, Peter Vanham here, filling in for Alan.
In the latest ESG tussle, BlackRock this week fired back at Republican officials who alleged the asset manager had stepped out of bounds on ESG and the transition to a net-zero economy.
As a reminder, back in early August, 19 state attorneys general wrote a letter objecting to BlackRock’s support for the “urgent need to accelerate the transition towards global net-zero emissions.” Two weeks ago, Republican officials in Texas and Florida went a step further, threatening to ban their pension funds from dealing with BlackRock over the firm’s insistence on ESG disclosures.
In a public response sent to CEO Daily this week, BlackRock lamented the criticism as part of a “politicization of the U.S. pension fund system,” and an “anti-ESG narrative.” It defended its ESG practices as serving its client interests.
“We ask companies to provide disclosures…so that investors can…better understand, quantify, and mitigate their risks. We do not dictate to companies what specific emission targets they should meet or what type of political lobbying they should pursue,” BlackRock said.
BlackRock also reminded its Republican critics that it is by no means boycotting U.S. energy companies, owning about $170 billion worth of their stocks. And it touted its waning support for shareholder proposals on environmental and social issues this year, saying it did not want to “micromanage.”
So, what to make of the BlackRock rebuke? I see two takeaways.
First, it’s time to acknowledge ESG means one thing to asset managers (a risk management tool), and another to retail investors and the public at large (a means to invest in green and socially minded companies). That discrepancy isn’t doing anyone any good.
Second, intended or not, there is a real gap between the stakeholder rhetoric of BlackRock’s senior leaders and the company’s actions on the ground. BlackRock does believe in a net-zero transition, but its shareholdings do not necessarily reflect that.
To its Republican critics, that may be reassurance, as BlackRock isn’t as activist as they may believe it be. But to those who think BlackRock does too little to nudge the companies toward sustainable and inclusive ways, it will undoubtedly provide ammunition for a next salvo in the ESG debate.
More news below.
Twitter’s former security chief Peiter Zatko and his erstwhile employer reportedly completed a $7 million settlement—which included a nondisclosure agreement—just days before he blew the whistle on alleged security and data-protection failures at the company. The allegations will be part of Elon Musk’s case against Twitter, which the tycoon is trying not to buy. Wall Street Journal
Germany vs. China
Germany, which seems to have learned a lesson from its disastrous over-reliance on trade with Russia, is reportedly preparing to reduce its dependency on trade with China and boost business with democracies instead. The measures could include the scrapping of investment and export guarantees for China, and screening investments between the two countries. Reuters
At least 10 EU countries are reportedly pushing back against the European Commission’s idea of a natural-gas price cap that specifically targets Russia. Moscow has already cut its EU gas supplies by around 80%, and Greece and others reckon the introduction of a cap would see the rest cut off too. Financial Times
AROUND THE WATERCOOLER
After Queen Elizabeth’s death, Bill Gates, Jeff Bezos, and major companies all sent out condolences. Here’s what they said, by Colin Lodewick
Queen Elizabeth II just died. Here’s what will happen to her $500 million fortune, by Kaitlyn Koterbski
The billionaire who hired Jerome Powell decades ago says he’d probably be happy if you lost your job, by Will Daniel
State-of-the-art amenities, communal gathering areas, and updated conferencing technology: How Marriott, Spotify, and Capital One are redesigning the workplace for a September return, by Aman Kidwai
Tech and finance moguls are putting money and weight behind ‘Trump with a brain’ Ron DeSantis, by Anne Sraders
This edition of CEO Daily was edited by David Meyer.
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