In 2018, BlackRock CEO Larry Fink wrote his annual letter as in previous years—but this one was different in that he broached the subject of companies serving “a social purpose.” That marked the world’s largest asset manager’s entry into a long-drawn political debate over investments that prioritize ESG (environmental, social, and governance) factors.
But five years after championing the cause, Fink now says he’s “ashamed” of being part of all the ESG talk—not because it isn’t worthwhile, but because it has become too politicized.
“I’m ashamed of being part of this conversation,” Fink said at the Aspen Ideas Festival on Sunday, Axios reported. “When I write these letters, it was never meant to be a political statement…They were written to identify long-term issues to our long-term investors.”
Later in the conversation, when asked for more about his comment on the ESG debate, Fink walked back his stance.
“I’m not ashamed. I do believe in conscientious capitalism,” Fink said.
The billionaire chief of BlackRock, which manages upwards of $9 trillion in assets, pioneered the idea of ESG before it became a buzzword in investing. ESG covers a broad spectrum of topics—from climate change to diversity to inclusion initiatives. BlackRock has since been caught in a tug-of-war, with Republicans calling the firm’s ESG push “woke capitalism” and progressives accusing it of “greenwashing,” or championing practices that aren’t as environmentally sound as they appear to be. Fink said that given how the term ESG had become “weaponized,” he wants to stay away from using it altogether.
“I’m not going to use the word ESG because it’s been misused by the far left and the far right,” Fink said, according to Axios.
Fink has spoken out about the criticism he has received as the unofficial face of ESG. In January, he said the attacks had gotten personal and that he was working on addressing “misconceptions” about BlackRock’s ESG policies.
“It’s hard—because it’s not business anymore, they’re doing it in a personal way,” he told Bloomberg during an event. “And for the first time in my professional career, attacks are now personal. They’re trying to demonize issues.”
It wasn’t always this way, though. Initially, BlackRock was synonymous with ESG and an important part of the Net Zero Asset Managers Initiative, a UN program aimed at finance companies reaching net-zero emissions goals by 2050. Fink’s letters even in 2019 and 2020 spoke of changes in how investing is viewed and how concerns like climate change were becoming a cornerstone for BlackRock.
“In the near future—and sooner than most anticipate—there will be a significant reallocation of capital,” he wrote in his annual letter from January 2020. “Climate change has become a defining factor in companies’ long-term prospects.”
In Fink’s 2022 letter, the focus had shifted to stakeholder capitalism, a concept based on companies serving the interests of all stakeholders, defending the attacks on BlackRock’s ESG stance from conservatives.
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” he wrote.
But several advocacy groups opposed BlackRock’s ESG push, accusing it of investing in China despite reports of human rights abuse of workers as well as in companies that harm the environment.
Several states also weighed in on the debate, with Texas claiming that BlackRock’s mission was “boycotting” fossil fuel companies and Florida threatening to withdraw $2 billion worth of treasury funds from the asset manager.
Despite the increasingly polarized debate over ESG, Fink seems intent on pursuing the cause.
“This is not going to be perfect, and it’s not going to be a straight line,” he told the Australian Financial Review earlier this month.
BlackRock declined Fortune’s request for comment.
Clarification, June 26, 2023: This article's headline has been updated to make it clearer that Fink is ashamed of how ESG has, in his view, been politicized.
