With increasing attention being paid to the negative consequences of so-called environmental, social, and governance (ESG) investing—which means selecting clients’ investments based on political rather than financial criteria—many hoped BlackRock’s annual letter to CEOs would signal a shift away from activism and back toward fiduciary responsibility.
Sadly, chairman and CEO Larry Fink’s letter offered no solace for the 60 million Americans depending on its services for their future retirement and hoping, perhaps wrongly, that BlackRock has their best interests at heart.
Fink’s letter is an unserious take on the world’s greatest challenges—in fact, it ignores them entirely—and shows BlackRock’s continued journey down the path of financial activism that will jeopardize the future of more than just the company’s clients.
While Fink pays brief lip service to the oil and gas industries (but neglects altogether coal, which provides a fifth of the nation’s electricity and remains one of our most reliable sources of energy), his capitulation to the demands of the woke climate movement will jeopardize the energy industry, which negatively affects the entire nation and even the world. His assertion that BlackRock “does not pursue divestment from oil and gas companies as a policy” may placate states like Texas, which recently enacted the Energy Discrimination Elimination Act to prohibit state contracts with companies that boycott fossil fuels, and West Virginia, which has already withdrawn its funds from BlackRock. However, it offers little comfort to the Americans losing their jobs because energy producers can’t get access to the capital they need to operate—let alone the billions of people worldwide who are subjected to brutish, short lives at the hands of energy poverty.
Energy poverty is the No. 1 issue facing much of the world. Nearly 800 million people have no access to electricity at all, and billions more have only occasional power—which means no modern medical care, proper sanitation, safe sources of warmth in the wintertime, or even the simplest comforts like lights that allow children to do homework at night. Even the vast majority of products we use on a daily basis come from fossil fuels.
This crisis is most deeply felt in sub-Saharan Africa, but even in the West, energy poverty is a serious issue. More than one in 10 American families have received a disconnect notice from a utility provider, and a third report difficulties affording their home energy costs. Expensive energy hurts the poor the most.
But Fink seems wholly unaware of the negative impact his proposed decarbonization movement would have on poverty eradication. Fink admits decarbonization makes goods and services cost more. We’re seeing this truth unfold in real time.
In New England, where electricity prices are far above average thanks to a heavily subsidized (and so far ineffective) attempt to transition to renewables, a quarter of electricity on Jan. 16 came from fuel oil—a heavily polluting energy source utilities only use when other sources become prohibitively expensive. Why did this happen? Because renewable energy failed. New England residents got more power from burning garbage and wood than wind and solar.
And Germany, the country perhaps most committed to the renewable energy “transition,” boasts the highest electricity prices in Europe. Last year, Germany was forced to use 11 percent more coal and nuclear because production of wind, solar, and hydro all fell. And with the recent early retirement of three nuclear power plants—which generate truly carbon-free electricity but don’t fit the climate industry narrative—Germans can expect even higher prices and less reliability. The European Union is so far down the path of decarbonization that its residents can’t afford expensive energy and are already going the way of the dodo bird, to use Fink’s own words. In the United Kingdom, for example, freezing deaths are on the rise because of high energy costs, with over 3,000 preventable wintertime deaths attributed to energy poverty.
Demanding a switch to less useful and more expensive energy sources will have the biggest impact on the poor, and it means each person and business paying more for electricity will have less power to make positive change in the world.
Just imagine how the world could change if Larry Fink chose to use his company’s $10 trillion in assets to end global poverty instead.
With increasing understanding of global natural disasters showing climate change is not making them worse—in fact, it may be making them better—BlackRock’s fixation on ESG ignores both the science of climate change and the long-term impact of decarbonization policies. While a mildly warming climate may present some challenges, humanity has already shown ourselves more than capable of handling the change. Climate-related deaths have dropped an incredible 98 percent in the last century, even though the world’s population has quadrupled. The benefits to both the environment and people from global greening, improved plant and crop yields from slightly higher carbon dioxide concentrations in the atmosphere, appear to far outweigh the potential risks.
And regardless of whether climate change is a help or a harm to humanity, it’s difficult to argue seriously that the immediate and tangible benefits of bettering human lives here and now are less worth our attention than the hypothetical consequences of gradually and mildly warming average temperatures—all of which are poorly understood, supported only by ambiguous statistical exercises, and far into the future.
If BlackRock truly believes in the power of capitalism to create a brighter future for our world, it should ditch climate alarmism and instead focus on fighting poverty around the world—including by boldly supporting access to affordable, reliable, and environmentally safe energy provided by fossil fuels.
This commentary originally appeared in The Epoch Times on January 24, 2022.