BlackRock’s push for shareholder democracy may undercut its devotion to stakeholder capitalism

The world’s largest asset manager, led by CEO Larry Fink, is a proponent of stakeholder capitalism if there ever was one. In his annual letter to CEOs, Fink wrote in 2022 that “stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”

But yesterday, BlackRock announced its largest ever expansion of its “Voting Choice” program. It allows BlackRock’s retail shareholder accounts, representing $2.6 trillion in assets under management, to vote at the annual meetings of the companies they hold shares in. In other words: small BlackRock investors can have their voices heard directly instead of having BlackRock speak on their behalf—or, rather, having Fink tell company CEOs what his clients value.

On its face, BlackRock’s Voting Choice is incongruous with the firm’s commitment to stakeholder capitalism. Stakeholder capitalism is about company management being empowered to consider all the company’s stakeholders in their decision making—and having the discretionary power to do so. Shareholder voting, by contrast, is the purest form of shareholder primacy; it is about shareholders having the ultimate say over all other stakeholders.

The upside of BlackRock promoting shareholder democracy, however, is that it could shield the company from further criticism that it’s trying to unfairly influence the corporate and political agendas. This past year, BlackRock was one of the main victims of attacks on business leaders pursuing an environmental, social, and corporate governance (ESG) agenda. That criticism hurt, and not just financially. Fink even stopped using the acronym ESG, despite being its greatest promoter at one time. 

By putting power in the hands of its investors, Larry Fink can now reasonably claim it’s ultimately up to shareholders to validate or not BlackRock’s views on ESG and sustainability. If his commitment to stakeholder capitalism is—theoretically, at least—collateral damage, so be it. 

More news below.

Peter Vanham
peter.vanham@fortune.com
@petervanham

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This edition of CEO Daily was curated by Nicholas Gordon.