Last month, activist investor Bluebell Capital called on BlackRock CEO Larry Fink to resign after accusing him of “hypocrisy” regarding the company’s environmental, social, and governance stance, CNBC reported.
Bluebell, a London-based activist fund, holds a small stake in BlackRock with approximately $350 million in assets under the investment company’s management.
In a November letter written by Bluebell to Fink, the activist fund expressed concern that Fink had deceived investors and caused a reputational risk to the company. According to Bluebell, Fink failed to deliver on a promise he made in 2020 to drop thermal coal investments.
“As shareholder in BlackRock, we are increasingly concerned about the reputational risk (including greenwashing risk) to which you have unreasonably exposed the company potentially fueling a gap between the ‘talk’ and the ‘walk’ on ESG investing; and the backlash caused by BlackRock’s ESG strategy which has alienated clients and attracted an undesired level of negative publicity,” the letter stated.
Fink, a staunch supporter of “stakeholder capitalism,” was also accused of “politiciz[ing] the ESG debate,” which caused Republican-led states, including Florida, Louisiana, and Texas, to divest over $3.5 billion previously managed by the company.
In an annual letter penned earlier this year, Fink rebuked the claim that BlackRock is using its financial weight to promote a political agenda.
“Stakeholder capitalism is not about politics,” wrote Fink. “It is not a social or ideological agenda. It is not ‘woke.’”
Bluebell Capital partner and co-founder Giuseppe Bivona told CNBC that the activist fund is worried that BlackRock’s actions do not align with its messaging.
Bivona claimed there is a “gap between what BlackRock consistently says on ESG and what they actually do.” He stated that the investment management company backed several “bad practices” and pointed to BlackRock remaining a shareholder in several coal companies.
“Let me say that when the price of coal was around $76 per ton, BlackRock was talking about essentially divesting,” Bivona claimed. “Now that the price of coal is $380 per ton, they are talking about responsible ownership. I think there is a high correlation between BlackRock’s strategy on coal and the price of coal.”
“In our latest activist campaign at Richemont, they have been opposing the increase of board representation for investors owning 90% of the company from one to three,” said Bivona. “I really don’t think this is in the best interest of the investor, upon which on a fiduciary basis they invest the money, and of course it’s not in the best interest of any shareholder.”
Blackrock told CNBC on Wednesday, “In the past 18 months, Bluebell has waged a number of campaigns to promote their climate and governance agenda.”
“BlackRock Investment Stewardship did not support their campaigns as we did not consider them to be in the best economic interests of our clients,” it added.