In the second quarter of 2022, BlackRock exceeded average market losses, with assets under management falling 22% to $8.5 trillion. Third-quarter assets under management fell another 15%, with adjusted earnings down 12.8% and revenue falling 15%.
Following the third quarter release, UBS analyst Brennan Hawken downgraded the company’s stock from Buy to Neutral and dropped the target price to $585 from $700. In Hawken’s note on the change, he cited growing pushback on BlackRock’s environment, social, and governance (ESG) investment strategy:
“We are downgrading BLK to Neutral based on environmental pressure to earnings and risk from the firm’s ESG positioning,” Hawken wrote in a note, stating that BlackRock could face increased regulatory inspection and the possibility of diminished fund management business.
“BLK’s early and energetic adoption of ESG principles in its fund management and shareholder proxy activities have positioned the firm as an ESG leader in our view. However, as performance deteriorates and political risk from ESG has increased, we believe the potential for lost fund mandates and regulatory scrutiny has recently increased.”
In August, 19 states joined together to pen a letter to Fink warning that state funds would be in jeopardy if BlackRock continued to prioritize environmental goals over investor returns. The letter cited dozens of examples where Fink’s public statements and BlackRock’s actions conflict directly with the company’s claims of political neutrality.
Will Hild, director of Consumers’ Research, said in response to Hawken’s assessment, “UBS is acknowledging the reality that American consumers and the state officials that manage their pensions are waking up to BlackRock’s ESG scam. Their misuse of public and private funds has cost Americans thousands in increased inflation. People are sick of it and fighting back. UBS is right. The backlash against BlackRock has just begun.“
Following Hild’s warning, news broke that Missouri State Treasurer Scott Fitzpatrick announced that the Missouri State Employees Retirement System (MOSERS) pulled $500 million in pension funds managed by BlackRock. Fitzpatrick cited his belief that BlackRock was ignoring its fiduciary responsibility in favor of forcing a political and social agenda.
“This is the right thing to do for Missouri state employees who rely on the assets managed by MOSERS for their retirement. Fiduciary duty must remain the top priority for investment managers—a duty some of them have abdicated in favor of forcing a left-wing social and political agenda that has failed to succeed legislatively, on publicly traded companies,” Fitzpatrick said.
He added, “MOSERS has an obligation to manage its assets in a way that prioritizes providing maximum possible returns for retirees and taxpayers. We should not allow asset managers such as BlackRock, who have demonstrated that they will prioritize advancing a woke political agenda above the financial interests of their customers, to continue speaking on behalf of the state of Missouri.”
“Missouri State Treasurer Fitzpatrick is taking decisive action to protect the people of Missouri by divesting pension funds from BlackRock, who has weaponized ESG by pushing radical climate and social policies under the guise of an investment strategy,” said Derek Kreifels, CEO of the State Financial Officers Foundation (SFOF).
Kreifels went on to explain how ESG investing hurts Americans. “BlackRock’s reckless agenda is robbing Americans of their retirement dollars and driving up costs from the gas pump to the grocery store. Treasurer Fitzpatrick’s commitment to his fiduciary duty and protecting Missourians’ hard-earned money follows similar actions to protect individual’s investments by several states including Utah, West Virginia, Arkansas, Louisiana, and most recently South Carolina.”
Following Fitzpatrick’s announcement, Hild added, “Treasurer Fitzpatrick is the latest in a growing line of state officials who are taking action to show the citizens of their state they’re willing to do what it takes to protect their financial well-being from BlackRock’s dishonest investment strategy.”
He also noted the effect ESG investing has on consumers. “Adding to the fact that BlackRock is prioritizing politics over profits, is the primary role they’ve played in crippling American energy companies and driving our nation into our current energy crisis. BlackRock’s ESG crusade has harmed American consumers financially, and it will leave many Americans struggling to heat their homes this winter. Consumers’ Research applauds Treasurer Fitzpatrick for doing what is right for Missouri and the American people.”
Fink did cheer rising energy costs at the recent meeting of the Clinton Global Initiative. He said they reduced the “green premium” and called to change the charters of global banks to align with his global ESG agenda. It looks like Fink’s firm is paying a green penalty. As of today’s close, BlackRock is trading below Hawken’s new target at $581, a loss of almost 40% year-to-date. ✪