Ditching its once-celebrated environmental, social, and governance agenda, BlackRock is now pivoting away from ESG and DEI initiatives after years of mounting criticism. The world’s largest asset manager has faced intense backlash, particularly from Republican groups labeling these policies as “woke.” Companies can’t please everyone. Especially when billions are at stake.
The numbers don’t lie. BlackRock slashed its voting support for environmental and social shareholder resolutions from a hefty 40% in 2021 to a measly 4% in 2023. That’s not just a reduction—it’s an abandonment. They’ve also exited the Net Zero Asset Managers Initiative, ditching their commitment to align portfolios with net-zero emissions by 2050. So much for saving the planet.
BlackRock’s ESG collapse: 40% to 4% support in two years. Sustainability promises abandoned for shareholder profits.
DEI didn’t fare any better. BlackRock completely removed DEI mentions from its annual report and stopped publishing gender and ethnicity workforce breakdowns. The new buzzword? “Connectivity and inclusivity.” Same church, different pew.
Instead, BlackRock is championing “transition investing”—supporting companies shifting toward a low-carbon economy rather than obsessing over ESG scores. They’re betting billions on clean energy projects under this rebranded strategy. It’s ESG with a makeover and better PR.
Why the change? Money talks. BlackRock acknowledges that excessive focus on non-financial factors can hurt client returns. States like Texas scrutinized their policies, creating legal headaches. CEO Larry Fink even stopped using the ESG acronym altogether in June 2023 due to political weaponization. The firm faced increasing pressure to remember its primary job—making money for clients, not social statements.
The shift reflects a broader trend in financial markets. ESG investing has been criticized for lacking transparency and measurable outcomes. CEO Larry Fink’s 2023 letter notably emphasized capital for transition rather than ESG principles, signaling this strategic pivot. Investors worried about conflicts with fiduciary responsibilities. The enthusiasm is waning.
BlackRock’s retreat signals a reality check for the financial sector. Feel-good initiatives are nice, but returns are better. As BlackRock leads this strategic pivot, other firms are likely to follow. In Wall Street‘s game of follow-the-leader, ESG and DEI might become yesterday’s trend.
