So the pullback in ESG firms continues, eh?

John had a post in December about corporations and campuses who were beginning to get pushback on their DEI initiative. BlackRock was one of those named, doing some verbiage shuffling to avoid legal challenges, among other problems besetting the grievance and equity industry.

…Investment manager BlackRock (BLK.N), which received a letter in April, removed language stating a scholarship was “designed for” members of specific underrepresented groups…

At the end of the month word broke that the state of Tennessee was suing the firm for “misleading” ESG policies and harming the bottom line for investors.

The last time we checked on BlackRock, the world’s largest asset manager, CEO Larry Fink complained that Environmental, Social and Corporate Governance (ESG) — the basis for its work investment strategy — was being “weaponized.”

Furthermore, late this year, there was a new report that “sustainability Funds,” such as the ones touted by BlackRock are not sustainable. Over the last quarter, investments in this type of fund fell by nearly $3 billion.

Now, the State of Tennessee is suing BlackRock in a first-of-its-kind lawsuit, alleging the firm has harmed consumers through its environmental commitments and climate strategy.

I’ve had several posts mentioning that ESG firms are either refusing to knuckle under to activist demands they would have quickly acquiesced to previously, or they’re dropping ESG some funds completely. Losing big money is bad juju for investment firms, even determinedly ideological ones.

Interestingly enough, major ESG investors in companies like Shell were also busy telling climate activists attempting to pressure the corporations through stockholder resolutions to, basically, suck wind.

Big U.S. investors at the top five western oil firms’ shareholder meetings this year rebuffed an activist group’s resolutions to align their emission targets with the Paris climate pact, in contrast to some European peers, voting data showed.

…According to the data published by it and investors, giant U.S. investors BlackRock (BLK.N), Vanguard, State Street (STT.N) and JPMorgan (JPM.N) all voted against the Follow This resolutions this year.

The one state chief executive who really did the most to get the move on state funds out of ESG guided firms was Ron DeSantis. He and the Florida legislature pulled over $2B worth of state funds out of BlackRock’s investment hands.

I’m proud to have taken strong action in Florida against Blackrock and the radical ESG agenda.

Nikki Haley’s supporter, Larry Fink, should get his company back to the basics — not push divisive DEI initiatives or ESG.

Because DEI and ESG are dead on arrival under my presidency. https://t.co/hUCWfjsbrS

— Ron DeSantis (@RonDeSantis) January 9, 2024

Since, there’s been a total of more than $6B in red states’ pension funds pulled out of BlackRock’s management coffers. That’s a hit in anyone’s book.

Now it looks as if the cumulative effect of all those chickens are starting to come home to roost. Or should I say “hitting” home?

BlackRock is laying off around 3% of its global workforce, Chief Executive Larry Fink and President Rob Kapito announced in a memo to employees Tuesday.

“As we prepare for 2024 and this very exciting but distinctly different landscape, businesses across the firm have developed plans to reallocate resources,” the memo said, without elaborating further on who would be cut.

The cuts would amount to about 600 employees. The layoffs are not focused on any single team or division, a person familiar with the matter said.

These “adios” letters from CEOs always kind of crack me up. Sucks to be the person getting them, but who exactly do they think they’re helping here?

He starts out strong – 2024’s gonna be great and we’ll be better and bigger than ever – then it’s all “shame you won’t be here.”

Dear colleagues,

Thank you for all that you’ve done this past year in a rapidly changing environment. Clients have entrusted BlackRock to manage more assets than any other manager in the world, and it is clear clients want to do even more with us. Adapting to seize opportunities is what has made BlackRock an industry leader.

…All of this presents us with unprecedented opportunities. As a growth company, it is vital that we continually challenge ourselves and ask how we can best prepare for those opportunities. We must have the best talent in the industry. We need to be agile and efficient in how we serve our clients and how we manage our resources. We must leverage technology, and we must redeploy people and resources where the client needs are greatest and the opportunities for growth the most promising.

Then he kicks them to the curb.

…Saying goodbye to colleagues is hard, especially when many are friends as well. But it is done with the important purpose of best positioning the firm for a new environment and serving the evolving needs of our clients.

Whatever, dude.

Some analysts are wondering if the BlackRock “retrenchment” from ESG is just a head-fake to chill out conservatives who are hounding them and making life uncomfortable at the moment. Until you look at their potential liability issues for what they were requiring as far as ESG.

YOICKS

…Those layoffs are one piece of evidence in favor of thinking that the nominal pullback is real. (It’s also, twinned with DEI-department cuts throughout industry, a warning to zillenials that majoring in Leftwing Grievance studies may not be as remunerative now as it was for their big siblings.)

Other indicators muddy the waters. According to Fox Business, at BlackRock “U.S. portfolio managers are no longer required to consider ESG metrics when not using ESG funds,” in part because “[i]n 2023, many so-called green investment funds have seen declines in assets amid weak performance as investments in sustainable energy products fail to produce significant returns.”

That sounds good, but what’s remarkable about it is not the moving-away-from ESG part. What it reveals is that heretofore BlackRock had required U.S. portfolio managers to consider ESG metrics when not running non-ESG fund. That’s pretty astounding. If BlackRock offers both ESG funds and non-ESG funds, the obvious implication is that for the non-ESG funds ESG considerations are excluded – certainly not that they are mandatory.

So BlackRock fund managers were required to do ESG governance even in funds with zero ESG links? What if you’d specifically requested a neutral fund to avoid worrying about losing money in ESG driven funds, and then find out your BlackRock manager was making investments based on that anyway?

Holy smokes – they could be in some trouble.

…And note that even now it appears that BlackRock is still allowing U.S. portfolio managers to consider ESG metrics when running non-ESG funds. It looks like the material disclosure failure is continuing – with the added problem that it’s not clear how that permission to use ESG criteria is cabined. Is it up to each manager, so that investors at BlackRock just have to hope that they get one of the managers who’s committed to achieving maximum returns rather than one who lets his politics influence his decision-making? I would think that disclosing which fund has which sort of manager would be a very material disclosure indeed, one that BlackRock should be making every time.

I’ll bet the TN lawsuit is a burr under their saddle.

For their next act, BlackRock is rolling out a Bitcoin tracking operation.

…On Wednesday, BlackRock is expecting approval from the Securities and Exchange Commission for its new Bitcoin “spot” ETF — the first time a crypto investment product tracking the daily price of the world’s most popular digital coin will be approved by securities regulators to trade on a public stock market. Other asset managers are also expecting approval for their ETFs.

Again, whatever, dudes. Diversification, right?

BREAKING: Blackrock will be laying off 600 employees, mostly from the ESG division.

ESG global investments collapsed by $5 trillion in just 2 years.

ESG is the system used by Blackrock and Vanguard to blackmail companies into adopting woke practices.

Here is BlackRock CEO… pic.twitter.com/SHLOVQhvTs

— End Wokeness (@EndWokeness) January 8, 2024

Looks like Larry Fink is going to have to slow down on “forcing” behaviors.

Hopefully for good.