BlackRock’s Larry Fink is trying to fend off Republican wrath

Greetings from Washington, where locals are vying for the timing of “full bloom.”The unseasonably warm weather makes the city’s cherry blossom buds their most perfect and most beautiful this weekend.

Meanwhile, political buffs are betting on how the failure of Silicon Valley Bank will shape the priorities of regulators and lawmakers in the coming months.

While Democrats Debate Whether to Revert Rules that treat medium-sized banks as systemic riskRepublicans this week argued that elites in the U.S. capital are out of touch with the concerns of everyday Americans.

At a press conference after lunch on Capitol Hill, Republican Senator Steve Danes of Montana said: criticized the decision to bail out SVB depositorsmany of them are tech start-ups and use taxation to other banks across the country.

“The bailout will put many Montana banks and Montana families on the brink of financial distress. [San Francisco] Bay Area Bank,” he said. “The last thing the federal government should do is side with the wealthy elite over the hard-working families.”

That the right-wing backlash against “awakened capitalism” is designed to exploit deeper fears about income inequality and how the benefits of globalization are unevenly distributed among US states. reminded me of

Read Patrick’s story about how BlackRock CEO Larry Fink sidestepped politics in his annual letter to investors.

And in accordance with the new “corporate political responsibility” doctrine, companies should be banned from funding campaigns. (Kenza Bryan)

Larry Fink letter dodges politics, but scrutiny will intensify in coming weeks

in him Annual Letter to InvestorsCEO Larry Fink defend black rock While deftly dodging US Republican attacks on his company as part of a broader crusade against investing in the environment, society, and governance.

Some of BlackRock’s clients want to invest in a way that aligns with the transition to a low-carbon economy. “We have clients who choose not to,” he said.

From there, Fink alerted him. The company’s new voting selection toolIt will be announced in 2021 and will allow investors to vote on the stock rather than relinquish this power to BlackRock. Investors collectively holding more than $500 billion chose to participate in the voting selection to voice their preferences at the company’s annual meeting, Fink wrote.

Voting remains a key issue for environmentalists, and human rights advocates are pressuring companies to change their behavior.Some say Moral Money faces an “existential threat” to their objectives if BlackRock withdraws its support for environmental and social shareholder proposals. BlackRock’s support for nearly half fellFurther weakening support for climate change and the workers’ cause would give companies an edge in maintaining the status quo, sources said.

But overall, Fink’s letter to investors confirms that global warming remains important to BlackRock, Moira Birss, director of climate finance at environmental nonprofit Amazon Watch, told me. .

“I am cautiously optimistic that he has really made it clear that climate change risk is an investment risk,” she said. “It was inspiring to see.”

And while Republicans withdrew more than $4 billion from BlackRock over ESG concerns, asset managers scored big wins this year. £8.8 billion UK Royal Mail Pension Plan in February Chose BlackRock for Money Management, switching from in-house management. Royal Mail last year set a target for his 2050 net-zero greenhouse gas emissions for its investment portfolio.

Fink stayed out of the fray with this annual investor letter, but in the weeks before the annual meeting season kicks off in earnest, BlackRock cannot avoid political scrutiny from the left and right. For example, a record number of abortion shareholder proposals will go to the ballot this year. We are watching the conference closely for voting cues from BlackRock and other large asset managers. (Patrick Temple-West)

How to perform CPR with Body Politics

After tear gas was barely cleared from Capitol Hill on Jan. 6, 2021, people funded Republicans who fostered the ‘stolen election’ fiction that inspired attacks on Congress that day I started challenging companies. Fallout has brought new focus to the previously somewhat obscure concept of “corporate political responsibility” or CPR.

Corporate responsibility has been difficult to define when it comes to political spending, lobbying, and the broader health of democracy. (moral money forum deep dive But two years later, the University of Michigan’s Erb Institute created what it called a nonpartisan, pragmatic framework for guiding corporate engagement in political issues.

You can read the principles of CPR here But they include prohibiting the use of corporate treasury funds for campaign funding and adopting existing disclosure standards, such as the Center for Political Accountability’s Code of Conduct on Political Spending. Among early adopters are IBM, Danone USA and Pirelli Tire North America.

Maureen Klein, Pirelli’s vice president of public relations and sustainability, told Moral Money:

“I think there’s a debate about whether the corporate world should be political, or whether that power should be used for good. With great power comes great responsibility, so I think we need both.” .” (Andrew Edgecliff Johnson)

ECB imposes new climate demands on ABS founders

during the banking crisis interest rate riseThe European Central Bank this week put pressure on banks to collect information on climate change risks as they round up asset-backed securities.

European countries issued €20.3 billion in ABS in 2022, up from €30 billion in 2021, according to S&P. Consisting primarily of auto and consumer loans, ABS typically lack climate information on the underlying assets and have complex classifications in the EU’s Sustainable Finance Disclosure Regulation, the ECB and the European Securities and Markets Authority. said in a statement this week.

“While no mandatory disclosure requirements are in place yet, the ECB and ESA are nonetheless seeking originators. [banks] At the inception of the loan, we have already collected the data necessary for investors to assess the climate-related risks of the underlying asset,” the duo said.

This ECB statement builds momentum for action on climate change. The ECB said in February that it will continue to buy green bonds on the primary market as it begins to scale back its asset purchase program this month.

of ECB said It would apply a “stronger slant” to bond issuers with better climate performance. “This approach supports the gradual decarbonization of the Eurosystem’s corporate bond holdings, in line with the goals of the Paris Agreement.”

The ECB’s climate action alone over the past two months has been quite impressive when compared to that of the Federal Reserve. In January, Chairman Jay Powell said the Fed Don’t be a ‘climate policy maker’”. Democrats are leading the way in Washington, but the Fed has lagged behind the ECB on climate change concerns. (Patrick Temple-West)

smart read

rich country is The Palm Oil Controversy Looks Badwrites FT columnist Alan Beattie. The Financial Times reported this week that the UK has won a comprehensive and forward-thinking deal for the Trans-Pacific Partnership, the jewel in the crown of Britain’s otherwise unimpressive post-Brexit trade deal. said it plans to eliminate tariffs on palm oil.

“The EU and other rich economies have failed to address concerns that their actions are arbitrary and lacking good faith. , has discredited the whole idea.”