ESG stands for environmental, social, and governance. But at BlackRock, the acronym has become synonymous with something else: drama.
The world's largest money manager and its CEO, Larry Fink, have been viewed as the face of the ESG investing movement on Wall Street. Starting in 2020, it became a key talking point for BlackRock executives and played prominently in Fink's letter to clients.
But a lot can change in a few years. Investing with environmental, social, and governance considerations in mind has become a political flash point, with BlackRock and Fink stuck in the middle.
Some have battered the firm for its so-called "woke capitalism," while others have chastised BlackRock for not living up to its ESG promises.
That brings us to Rebecca Ungarino's story on BlackRock's ongoing delay of an ESG-focused ETF.
An application to launch the fund — an ESG municipal bond ETF — was initially filed last fall. But BlackRock has filed to extend the period for debuting it nearly every month since.
Delaying the launch of a financial product isn't unheard of. But BlackRock, which manages some 1,300 ETFs totaling $3.2 trillion in assets, is no stranger to the game. One source told Rebecca something like this is "rare for a shop like BlackRock," adding that the firm and its CEO "are getting a lot of blowback about ESG."
If you think it's unfair to read so deeply into the timeline of a single ETF, understand this isn't occurring in a vacuum.
BlackRock is entering a critical juncture. Fink, a cofounder and the company's sole CEO for its entire history, is preparing to retire. And while he's not planning on leaving the firm imminently, the 70-year-old isn't going to stick around forever.
Replacing a leader of Fink's magnitude is difficult enough, but BlackRock's added challenge is not having a clear succession plan. The ESG backlash hasn't helped.
All of this has left Fink and BlackRock in a weird limbo. The CEO seems intent on leaving the company in the best shape possible while not completely punting on the ideologies he's spent the better part of the past few years touting.
At times, it seems Fink can't even get his story straight. This summer, he said he was "ashamed" to be a part of the ESG political debate, only to deny he said as much during the same conversation, adding he believed in "conscientious capitalism."
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