Going green is essential, says boss of world's biggest money manager

The boss of the world’s largest money manager has insisted it is not ‘woke’ to go green and to care about more than just profit.

In his annual letter to the chief executives of companies he invests in, Blackrock founder Larry Fink defended a focus on the environment, sustainability and other issues.

Urging them to embrace a green agenda, he said: ‘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. This is the power of capitalism.’

Insisting the ‘fair pursuit of profit’ and ‘long-term profitability’ was key to success, he said firms must also ‘create value for and be valued by’ society as well as shareholders.

‘We focus on sustainability not because we’re environmentalists, but because we are capitalists,’ added Fink, whose own fortune is valued at £800million.

His annual ‘Dear CEO’ missive regularly causes a stir and his comments come just a week after fund manager Terry Smith attacked Unilever, saying it had ‘lost the plot’ and was ‘obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business’.

Fink also used this year’s letter – entitled The Power of Capitalism – to warn that firms rolling back flexible working ‘do so at their peril’.

‘Companies expected workers to come to the office five days a week. Mental health was rarely discussed in the workplace. And wages for those on low and middle incomes barely grew. 

‘That world is gone,’ he said of life before the pandemic. ‘Companies not adjusting to this new reality and responding to their workers do so at their own peril.’ 

Blackrock manages £7.5trillion of savers’ cash in a host of funds and has huge influence over the companies in which it holds stakes.

Rather than selling out from carbon-intensive firms, Blackrock prefers to remain an investor and persuade them to change their ways. 

But the money manager has come up against stiff opposition for its agenda which focuses on environmental, social and governance (ESG) issues.

Critics have accused Blackrock and Fink himself of ‘woke posturing’ and behaving like an ‘activist’ investor.

Neil Wilson, an analyst at Markets in the City, said: ‘Chief executives privately complain of the pious brigade that ignore the messy realities of life and doing business.’

The US state of West Virginia this week said it would no longer use a Blackrock fund because of the damage it was doing to the economy. 

The fund was pushing companies in West Virginia to embrace net zero investment strategies that would have harmed the state’s industry.

West Virginia is known for its heavy industry, in particular its chemical and coal firms. It is the second largest coal producer in the US and ranks fifth in total energy production.

West Virginia state treasurer Riley Moore said: ‘I have a duty to ensure that taxpayer dollars are managed in a responsible, financially sound fashion which reflects the best interests of our state and country, and I believe doing business with Blackrock runs contrary to that duty.

‘Blackrock has urged companies to embrace net zero investment strategies that would harm the coal, oil and natural gas industries, while increasing investments in Chinese companies that subvert national interests and damage West Virginia’s manufacturing base and job market.’