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  • Writer's pictureLucian@going2paris.net

BlackRock Letter To AGs

Charlottesville

September 13, 2022


Quite a missive that BlackRock wrote in response to the AGs questions about ESG. I assume that BlackRock understood that no matter what it said, the AGs were not going to be satisfied.


Anyway, I dug to find a copy of the letter instead of reading summaries from news outlets.


I like how the letter is from BlackRock's head of external affairs. I worked for CEOs who would want to sign such letters. You gotta keep your powder dry and always keep the C suite available for down the line.













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tommasopacelli
Sep 14, 2022

I found this article about ESG from CNBC and the person in charge of this at one firm. One thing which the WSJ identified was that these firms make 0.2% fee on ESG and 0.14% on other types. follow the money.


https://www.cnbc.com/2021/08/24/blackrocks-former-sustainable-investing-chief-says-esg-is-a-dangerous-placebo.html

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cnesbit
Sep 13, 2022

I found two interesting facts in Blackrock's statement:


1) It allows public pension funds to specify how shares held in "many" Blackrock funds will be vote. It does not quantify "many" so we don't know if many means 30% of the Blackrock funds, 60% of the Blackrock funds or 90% of the Blackrock funds. Once could consider their claim someone vague.

2) It does not state Blackrock allows private individual or institutional investors in Blackrock funds to vote their shares. By not speaking to private investors, being allowed to vote shares, the only assumption I can make is the Blackrock perceives it knows what is best for those investors, and votes accordingly, without seeking their input.


The combined assets held…

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Lucian@going2paris.net
Lucian@going2paris.net
Sep 13, 2022
Replying to

Regarding your first point Chuck: https://www.blackrock.com/corporate/about-us/investment-stewardship/blackrock-voting-choice The answer seems to be TBD. Regarding anti-trust, that’s an awful lot of influence in the hands of few. It also an awful lot of economies of scale that I suspect keep their fees low to its investors. We got to this situation through a free market (I think we’d agree on that). Will government intervention result in a better situation? Government would have to decide on questions such as how much concentration is appropriate. Is that something government can do reasonably?

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tommasopacelli
Sep 13, 2022

my first boss was a retired Colonel, a very tough bird. He said many a time when people would get irritated with our decisions... "a pig doesn't squeal until it has been squeezed". Surely Black Rock sees that they will lose some business and are squealing. Hopefully they took that into account when they developed their strategy.

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tommasopacelli
Sep 14, 2022
Replying to

A good number of factors influence bond ratings. It would be surprising this one factor caused this supposed increase in issuing costs.

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dsmithuva75
Sep 13, 2022

You said it, Tom!

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tommasopacelli
Sep 13, 2022

So Black Rock has taken a position with how it will implement its' approach to investing in various technologies, companies, etc... They also advertise and promote how they will make this approach. They want the freedom to do so as is their right. They made that choice. All well and good.


They should then also respect those same freedoms and rights for other investors which includes states who manage pension funds for their employees.

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