This article was authored by Andy Puzder for RealClearMarkets on August 2, 2023
Amid growing criticism of its environmental, social and governance (ESG) investment practices, BlackRock has announced that it will offer retail investors in its largest exchange-traded fund (ETF) the opportunity to participate in its “Voting Choice” program. Open to institutional clients since January 2022, this program allows investors to choose from a limited set of options to guide BlackRock in voting their shares. While perhaps an effective PR tool, Voting Choice is little more than a ruse that neither empowers investors nor diminishes BlackRock’s power to impose its ESG goals on American businesses.
BlackRock’s equity index has about $4.5 trillion in assets under management (AUM), empowering it to cast a whopping 10% of the shareholder votes for the entire S&P 500. As BlackRock CEO Larry Fink has admitted, BlackRock uses that formidable power to “force behaviors” on the companies in which it invests.
For example, in his 2020 annual letter to CEOs, Fink stated that BlackRock would use both “disclosures” and “engagement” to ascertain whether companies had operating plans that assume the Paris Agreement’s climate goals are “fully realized.” He cautioned that in 2019, “BlackRock voted against or withheld votes from 4,800 directors at 2,700 different companies” and warned that it would be “increasingly disposed to vote against management and board directors” who failed to perform as instructed.
In August 2022, 19 red state attorneys general wrote to Fink informing him that proxy voting to advance ESG or other ideological causes violated their laws governing fiduciary duties. Ten states passed laws making it clear that such proxy voting is a breach of fiduciary duty. The Voting Choice program is an attempt to create a defense against fiduciary-malfeasance claims by making it appear that BlackRock has seen the errors of its ways and is returning proxy-voting power to investors. But that simply is not the case.
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