Monday, June 7, 2021
Friend of the BLPB Bernie Sharfman recently alerted me to an online piece he posted on environmental, social, and governance (ESG) investing, How BlackRock Strikes Out On the Issue of Climate Change. In his post, offering BlackRock as an example, Bernie raises concerns about the negative aspects of establishing ESG funds. Specifically, he offers that a focus on ESG investment and reporting can reduce a sense of urgency in remedying climate change and can have other unintended undesirable effects. He also notes that BlackRock has only limited influence in establishing efficacious ESG investments, due to the nature of its role and investment portfolio. He concludes as follows:
BlackRock can be part of the solution by attempting to add “financial innovation” as a tool in the battle against climate change. Such financial innovation should be targeted to creating new private equity funds that help provide the billions of dollars of funding that will be needed by new and growing carbon-cutting companies. BlackRock can market these funds to the millions of retail investors who currently invest in its products.
ESG investment opportunities are a hot topic these days. Bernie's post offers some food for thought about the double-edged sword they may present.