BlackRock’s Fink Reframes ESG in Annual Letter

BlackRock’s Fink Reframes ESG in Annual Letter

The top ETF issuer’s CEO address steers clear of ESG terminology, but the firm isn’t giving up on sustainable investing.

Reviewed by: Heather Bell
Edited by: Heather Bell

On Wednesday, Larry Fink, the chairman and CEO of the world’s largest asset manager and exchange-traded fund issuer, published an annual letter that topped out at around 9,000 words. To say it addressed myriad topics is an understatement.

Early on, he asserted his belief that “it’s critical for CEOs to use their voice in the world” to help support clients. He also noted that instead of the two annual letters he has written in recent years past, which were, respectively, from him to CEOs on behalf of BlackRock’s clients and from him to BlackRock shareholders, he has written one letter to address all the firm’s stakeholders, as everyone is facing similar issues.

Where’s the ESG? 

Given the backlash against ESG in recent months, how Fink would address the issue has been a major topic of interest. While the “ESG” term itself is nowhere to be found in the 9,000 words of the letter, the word “sustainability” is used multiple times, and there are entire sections devoted to the global energy transition and proxy voting.

His characterization of environmental issues steered away from a “do gooder” perspective and reframed them in a more clinical manner as investment opportunities. Fink reiterated that BlackRock continues to view climate risk as an investment risk, noting that the severity of weather phenomena has worsened at the global level.

“It’s hard to find a part of our ecology—or economy—that’s not affected,” Fink said in the letter. 

He noted that the low-carbon economy is “top of mind” for a lot of the firm’s clients, but also acknowledged that other clients are uninterested in aligning their investments with the energy transition, something that dovetails with discussions of investor choice in other parts of the letter.

“Changes to government policy, technology, and consumer preferences will create significant investment opportunities,” Fink added. He also reiterated his belief that the up-and-coming firms driving innovation going forward will be focused on the energy transition rather than search engines or social media.

Fink also highlighted that BlackRock has pushed companies for more disclosures and for more information about how they intend to address climate risks, while noting that “it’s not our place to be telling companies what to do” as minority shareholders. 

Tellingly, he noted that the firm treats global energy transition the same as it does any other investment opportunity.

Proxy Voting  

The proxy voting question is another facet of BlackRock’s positioning to provide its clients with more choice and its devotion to ESG strategies. Again, Fink reiterated the firm’s previous position on why proxy voting could benefit investors, indicating it directly relates to governance.

“I believe that, if widely adopted, voting choice can enhance corporate governance by bringing new voices into shareholder democracy,” he said.

Fink pointed out that clients with $500 billion in assets under management have opted to participate in BlackRock’s proxy voting program. He also noted that while BlackRock is devoted to the concept of stewardship and engaging with the companies it invests in year-round, he believed that a diversity of views will achieve better results than relying on a limited number of proxy advisors. 

“How the voting ecosystem changes over the next decade can be a transformative force that reshapes corporate governance,” he said, having noted previously in the letter that the concept of proxy voting introduced by the firm is supported by CEOs and its clients.

The broadly focused iShares ESG Aware MSCI USA ETF (ESGU) is the largest iShares ESG ETF with $19 billion in assets under management. It trailed the $273 billion Vanguard Total Stock Market ETF (VTI) by less than 1% in 2022, with both funds down around 20%. 

Bullish on Bond ETFs  

In a section focused on the firm’s client-centric approach, Fink addressed the success of BlackRock’s ETFs. Not only did the asset manager lead the ETF industry with a gain of $220 billion in flows in 2022, it rolled out 85 new ETFs worldwide. Its bond ETFs, in particular, also represented more than half of those inflows, at $123 billion.

The performance of bond ETFs was a topic of discussion, as bonds demonstrated performance that was nearly as poor as that of equities in 2022. BlackRock’s two largest U.S. bond ETFs, the $87 billion iShares Core U.S. Aggregate Bond ETF (AGG) and the $34 billion iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD), both saw double-digit declines last year. However, that did not deter investors looking for safety.

The letter suggests that its bond ETFs will be an area of growth going forward.

“We believe that bond ETFs will continue to catalyze advances in fixed income market structure and will become further integrated into an increasingly modern, electronic fixed income marketplace,” Fink said, noting that the products have made it much easier, cheaper and more efficient to invest in a fragmented fixed income market. 


Contact Heather Bell at [email protected] 

Heather Bell is a former managing editor of She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.