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The revolving door between Washington and Wall Street always stirs passionate objections from progressive good-governance groups — except, it appears, when it involves corporate wokeism.
For proof, all you need to do is unpack the Biden administration’s so-called Environmental Social Governance agenda and its ties to BlackRock, the world’s biggest money-management company headed by Larry Fink, which manages more than $9 trillion in assets.
BlackRock has been an active cheerleader for White House policy toward ESG — the practice of prodding industries to enact climate-control measures and adopt other lefty shibboleths such as board diversity as part of their business models — and profit from it without attracting much attention from the usual suspects.
Since his days on the campaign trail, Joe Biden has made no secret that he wants much more government in the economy. Now that he’s president, Biden’s Securities and Exchange Commission is no longer intent on merely protecting small investors from financial fraud; it now wants to reverse climate change by imposing ESG standards on all public companies that mandate disclosure of their carbon footprint.
Corporate governance used to focus on what companies can do to deliver profits over the long haul. No longer. The Treasury Department’s Financial Stability Oversight Council recently identified “climate change as an emerging and increasing threat to US financial stability.”
It doesn’t end there. The Biden Labor Department is now proposing a new rule that would force companies and their 401(k) sponsors to include investments that adhere to ESG standards. To make room for these new ESG offerings, the best-performing funds will take a back seat to funds that adhere to the woke mandates.
Again, the revolving door is nothing new; big business is always looking for ways to shape government policy in ways that serve its self-interest. What’s different here is how big of a role people associated with Larry Fink’s BlackRock have taken in formulating national ESG policy, and how much the company stands to profit from it with barely a peep from that aforementioned gotcha crowd.
For those who don’t know Fink, he’s one of the most fascinating, powerful and woke figures on Wall Street. His firm runs money for individuals, businesses and governments across the globe, also managing the Fed’s massive portfolio of debt off and on since the 2008 financial crisis.
Fink is a billionaire, and his success enabled him to become a key player in the Democratic Party. And he hasn’t been bashful in deploying BlackRock’s clout to advance Democratic economic causes in ways that happen to support its bottom line.
Last year, he famously wrote an open letter threatening to push for the removal of board members of companies BlackRock invests in if they refuse to toe the progressive line on climate change.
More recently he has vowed to make ESG a centerpiece of BlackRock’s investing model. As Eleanor Terrett of Fox Business has reported, BlackRock now offers more than 150 mutual funds and exchange-traded funds (investment pools that trade like stocks) that adhere to ESG standards — more than any other firm on Wall Street.
BlackRock manages more than $400 billion in ESG client money, which means it’s making money hand over fist being an environmentally aware corporate citizen since, according to Terrett, these funds can carry fees that are as much as 40 percent higher than other similar investments. (BlackRock counters that its ESG ETFs are cheaper.)
Fink, meanwhile, has some important help in advancing this profitable ESG investing model. As it turns out, the Biden administration is stocked with former BlackRock people who are doing the same on a national regulatory level.
Take Brian Deese, the current head of the National Economic Council. He was Fink’s global head of sustainable investing. Or take Deputy Treasury Secretary Wally Adeyemo. He was Fink’s former chief of staff and is one of the top advisers to Treasury Secretary Janet Yellen, who is a key player in the national ESG push.
There are other BlackRock people serving in the Biden administration with more tangential ties but who are powerful nonetheless. They include Michael Pyle, BlackRock’s former global chief investment strategist. He’s now chief economic adviser to VP Kamala Harris. Then there’s Tom Donilon, chairman of the BlackRock Investment Institute. His brother, Mike Donilon, is Biden’s senior adviser and chief campaign strategist.
The White House didn’t return calls for comment. BlackRock said in a statement that “climate risk is investment risk. We do believe that limiting the impact of climate change is better for the economy and will lead to higher growth.” Fink, for his part, may really believe climate control is necessary for mankind to survive. Deese, who according to his latest White House disclosure held $2.4 million in BlackRock stock, may also be pushing for government policies without thinking twice about how it benefits his old firm.
But appearances do matter. And the appearance of a revolving door between BlackRock and the White House deserves more scrutiny.
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