Despite what conservatives would have you believe, ‘woke’ capitalism is not taking over

Companies like BlackRock are really just conservatives in softer clothing

James Moore
Tuesday 18 January 2022 15:27 GMT
<p>BlackRock chief executive Larry Fink insists they are not ‘woke’. </p>

BlackRock chief executive Larry Fink insists they are not ‘woke’.

It speaks to the degeneration of the US conservative movement that the boss of BlackRock, the world’s biggest money manager and flagship of capitalism’s fleet, feels the need to address accusations of “wokeness”.

It follows a blast from Will Hild, executive director of the conservative Consumers’ Research, who accused the outfit of “virtue signalling in the United States” while aiding China’s commies. Republican senator Marco Rubio lambasted “woke capitalism” in the wake of companies including BlackRock signing a letter opposing “discriminatory legislation”. His fellow Republican Ted Cruz hailed Texas for protecting oil jobs from the same thing.

But we are not “woke”, said the money manager’s boss Larry Fink in his annual letter to other CEOs, mounting a feisty defence of what he called “stakeholder capitalism”.

“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not woke,” he fulminated. “It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.”

That’s telling ‘em. Back to sunny Cancun, where you hid from the winter freeze in Texas, Mr Cruz. Why not take Rubio and the rest of the wannabe Trumps with you?

Honestly, by the likes of today’s top Republicans, Mitt Romney would be considered woke. Rishi Sunak and Boris Johnson might even qualify. Britain’s party planner in chief is, when he’s moved to actually do his job as prime minister, quite keen on repressive laws, voter suppression and the culture wars. But he also wants Britain to embrace net zero. That’s all it takes for conservative rubes across the Atlantic to raise their branding irons.

But back to Mr Fink, and his radical left view that companies “who forged strong bonds with their employees have seen lower levels of turnover and higher returns through the pandemic”. And his statement that “climate risk is investment risk”. And his assertion that “we focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients”.

Mr Fink is quite correct. Climate risk is investment risk and a capitalism that doesn’t embrace sustainability is going to eat itself. The economic blowback from a rapidly heating planet will be fierce. It will burn economies and it will scorch investment returns, and the savings of Mr Fink’s clients while it’s at it. That includes you and me.

Trouble is, despite his characterisation of BlackRock as a champion of “stakeholder capitalism” and conservative claims that it is somehow a standard bearer for wokedom’s radical left legions, he and his buddies aren’t managing that risk terribly well.

Share Action, a responsible investment campaign group, monitors the voting behaviour of big money managers with respect to social and environmental issues and produces an annual report on its findings. Of the 65 global money managers that featured in the most recent, BlackRock’s performance dawdled in at a dismal 48th place, one rung below Goldman Sachs Asset Management. Mr Fink’s colleagues backed just 53 per cent of the environmental motions analysed and 40 per cent of the societal ones for an overall score of 40 per cent.

There’s more. Money managers like BlackRock typically hire other firms to advise them on how they should vote on motions like the ones the report considered. Two firms dominate: ISS and Glass Lewis. Neither one could be classified as “woke” by the impartial observer. They are quite conservative by traditional standards, perhaps because it’s good for business.

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ISS recommended that investors support 75 per cent of the assessed shareholder resolutions overall, Glass Lewis recommended that investors support 44 per cent - both better scores than the one achieved by BlackRock, which clearly isn’t even listening to the (very orthodox) advice it’s getting.

There’s still more. 18 of the resolutions which failed would have received majority support if either BlackRock, or one of the other three largest asset managers, had switched to vote in favour of them. The report’s top performer, London-based IMPAX, backed every environmental resolution and 99 per cent of the social ones. It is a specialist, the mission statement of which says it aims to generate returns from the “opportunities arising from the transition to a more sustainable economy”.

But Aviva Investors, a more traditional money manager, and the UK’s number two performer with its ninth placed finish, still managed 94 per cent (environmental) and 91 per cent (social). Woke it is not. An exemplar of the “stakeholder” capitalism that BlackRock claims to support? It might be. Money managers like BlackRock arguably have more power on how capitalism works globally than do governments, including the US government. That power is conferred upon them through their voice and their voting power.

It is Mr Fink’s words that have roused the ire of people like Cruz, and Rubio, and other conservative critics. Statements like this: “Our conviction at BlackRock is that companies perform better when they are deliberate about their role in society and act in the interests of their employees, customers, communities, and their shareholders.”

But it is his firm’s actions that speak louder and BlackRock’s actions where it counts have been found wanting. Fink & co are really just conservatives in softer clothes. They’ve a bit more to do if they want to prove that stakeholder capitalism is a reality and is capable of helping to save the planet it’s currently devouring.

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