The world’s largest financial asset manager, BlackRock, has admitted that its bottom line could be hurt as a result of its cultural Marxist agenda. In its Annual Report filed with the Security Exchange Commission (SEC), BlackRock highlights its Environmental, Social, and Governance (ESG) policies as a key risk that might cause it to lose revenue and damage its earnings.

Recently in the US, we have seen how activist judges are imposing their political will on the people. Left-wing corporate activists use money to enforce their radical agenda. BlackRock is the world’s largest asset manager, with over 10 trillion US dollars in assets under management. BlackRock is part of the big 3 Index Fund Managers, the other two being Vanguard Group and State Street. Together, these companies control the world economy, and are the biggest stockholders in virtually every major company.

They are able to influence the policy agenda of companies, in two ways: through voting rights by virtue of being significant shareholders; and through providing additional funding. As a result, companies obey their demands, and support or acquiesce to their political causes.

In 2017, the CEO of BlackRock, Larry Fink, proudly stated how BlackRock was going to force the world to change. Fink revealed BlackRock would ‘force behaviours’ on ‘gender or race’ and threatened impacts to compensation if Diversity, Equity, and Inclusion (DEI) standards were not met. ‘Behaviours are gonna have to change and this is one thing we’re asking companies. You have to force behaviours, and at BlackRock we are forcing behaviour,’ he said. Fink admits that ESG is driving energy prices higher, but it is a good thing, because it shrinks the so-called green premium. ‘Because of the rising energy prices, we are seeing the green premium shrink quite considerably. And so the amount of investment dollars that are going into new decarbonisation technology is accelerating rapidly.’

The arrogance and hypocrisy of these corporate leaders is astonishing. I wonder what Larry’s carbon footprint would be. He’s only worth a mere 1.2bn USD. Must be nice to force behavioural change while trotting around the globe in your giant private jet.

Disney also had a recent filing with the SEC, where the corporation acknowledged to shareholders that their radical politics is costing them billions of dollars. Disney’s political agenda is completely out of step with its customers, who are turning away, resulting in Disney losing a ton of money.

In its November 2023 public filing, Disney acknowledged the risks it’s taking ‘relating to misalignment with public and consumer tastes and preferences for entertainment.’ Disney lost a reported $1billion on its last four high-profile releases. Its success ‘depends on our ability to consistently create compelling content. When creators do not achieve sufficient consumer acceptance, profits fall,’ the report stated. ‘Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brand,’ it added.

What an astonishingly arrogant statement to make to your investors. The company boldly violates its fiduciary duty, and then plainly reveals this to its shareholders. Hey shareholder, thanks for investing in us, but we don’t care about making you money, our woke politics is all we care about, and so we’re just going to lose your money. Hope that’s OK. Not our fault though. The customer is not always right. These damn kids just don’t get DEI, what’s the matter with them!?

BlackRock’s filing last week stated, ‘BlackRock faces increasing focus from regulators, officials, clients and other stakeholders regarding ESG matters, which may adversely impact its reputation and business.’ Who are these other stakeholders? The only stakeholder should be the shareholder, and the company has an obligation to maximise value for its shareholders. The other stakeholder is their political objectives.

According to the filing, ‘BlackRock is subject to competing demands from different stakeholder groups with divergent views on ESG-related matters, including in countries in which BlackRock operates and invests, as well as in states and localities where BlackRock serves public sector clients.’

In April 2023, Texas passed Senate Bill 13, which essentially said that if you boycott oil and natural gas, Texas will boycott you. Additionally, if you attack the second amendment, and try to influence the constitutional right of Texans, the state of Texas will not invest in you. Now, if the state of Texas will not invest in you, with its massive amounts of cash, this has got to hurt. Oil and natural gas create millions of jobs in Texas and produce enormous amounts of benefits and revenue for Texans, and these companies have been rejecting oil and gas and imposing massive costs on oil and gas production. I am not a fan of the state interfering in the free markets. But in this instance, Texas as an investor is making a decision based on individual buying/risk assessment behaviours. The state of Texas of course has significant leverage, more so, than any individual Texan. But it is up to Big Business to influence decision-making of all potential investors.

BlackRock’s filing continues, ‘Some US states and state officials have adopted or proposed legislation or otherwise have taken official positions restricting or prohibiting state government entities from doing certain business with entities identified by the state as ‘boycotting’ or ‘discriminating’ against particular industries or considering ESG factors in their investment processes and proxy voting. Other states and localities may adopt similar legislation or other ESG-related laws and positions that adversely impact BlackRock’s business.’ BlackRock recognises the risk of other red states divesting from them. They must decide on the kind of investors they wish to attract. Those that prioritise traditional investment strategies such as profit maximisation, and the rest. Unfortunately for Larry, he cannot force behaviours quickly enough, and investors are still choosing a financial return.

And finally, from the filing, ‘BlackRock may also communicate certain initiatives and goals for its corporate activities related to environmental, diversity, and other ESG-related matters. BlackRock could be criticised for the scope or nature of any initiatives or goals, or for revisions thereto. Such initiatives or goals may be difficult or costly to implement, may not advance at the anticipated pace, or be accomplished within the announced timeframe or at all. If BlackRock is not able to successfully manage ESG-related expectations across varied stakeholder interests, it may adversely affect BlackRock’s reputation, ability to attract and retain clients, employees, shareholders and business partners or result in litigation, legal or governmental action, which may cause its AUM, revenue and earnings to decline.’

BlackRock calls out the risk of being ‘criticised’ on its ESG-related initiatives or goals, potentially by its shareholders. But also seems concerned about the impact of not successfully managing ESG-related expectations across varied stakeholders.

I wonder if they are more worried about the possible decline in earnings from not meeting the needs of their shareholders, or the potential adverse reputational impact from disappointing this varied stakeholder base, which I assume includes everyone except the shareholder. The shareholder has one primary interest, maximised return. Varied stakeholders will have various demands. It would be impossible to satisfy all parties in the ESG pyramid. BlackRock would need to decide the trade-offs it is willing to make.  Looks like they’re stuck between a Rock and a hard place.