Both letters from Black Rock announced the now inevitable earthquake that’s coming to global capitalism. The letter didn’t say precisely when it will hit, but did say, “In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”
First who is Black Rock? Does this company that really own the world? I would Say Yes…
The letter to the heads of the firms in which the world’s largest investor invests
Fundamental Reshaping of Finance:
Dear CEO,
As an asset manager, BlackRock invests on behalf of others, and I am writing to you as an advisor and fiduciary to these clients. …
I believe we are on the edge of a fundamental reshaping of finance.
The evidence on climate risk is compelling investors to reassess core assumptions about modern finance. …
Investors are increasingly reckoning with these questions and recognizing that climate risk is investment risk. …
In the near future – and sooner than most anticipate – there will be a significant reallocation of capital. …
As a fiduciary, our responsibility is to help clients navigate this transition. …
Over the next few years, one of the most important questions we will face is the scale and scope of government action on climate change, which will generally define the speed with which we move to a low-carbon economy. …
We don’t yet know which predictions about the climate will be most accurate, nor what effects we have failed to consider. But there is no denying the direction we are heading. Every government, company, and shareholder must confront climate change. …
Source: BlackRock
The letter to the world’s wealthiest individuals and their financial advisors
Sustainability as BlackRock’s New Standard for Investing
Dear Client,
Since BlackRock’s founding in 1988, we have worked to anticipate our clients’ needs to help you manage risk and achieve your investment goals. As those needs have evolved, so too has our approach, but it has always been grounded in our fiduciary commitment to you. …
The most significant of these factors today relates to climate change, not only in terms of the physical risk associated with rising global temperatures, but also transition risk – namely, how the global transition to a low-carbon economy could affect a company’s long-term profitability. …
As your fiduciary, BlackRock is committed to helping you navigate this transition and build more resilient portfolios. …
These models will use environmental, social, and governance (ESG)-optimized index exposures in place of traditional market cap-weighted index exposures. …
• Reducing ESG Risk in Active Strategies – In heightening our scrutiny on ESG issues. …
• Putting ESG Analysis at the Heart of Aladdin – We have developed proprietary measurement tools to deepen our understanding of material ESG risks. For example, our Carbon Beta tool allows us to stress-test issuers and portfolios for different carbon pricing scenarios. …
• Doubling Our Offerings of ESG ETFs. …
• Working with Index Providers to Expand and Improve the Universe of Sustainable Indexes. …
• Expanding Sustainable Active Investment Strategies. …
Our Commitment
Our role as a fiduciary is the foundation of BlackRock’s culture. …
We invest on your behalf, not our own. …
While the low-carbon transition is well underway, the technological and economic realities mean that the transition will take decades. Global economic development, particularly in emerging markets, will continue to rely on hydrocarbons for a number of years. As a result, the portfolios we manage will continue to hold exposures to the hydrocarbon economy as the transition advances.
A successful low-carbon transition will require a coordinated, international response from governments aligned with the goals of the Paris Agreement, including the adoption of carbon pricing globally, which we continue to endorse. …
The steps we are taking today will help strengthen our ability to serve you as a fiduciary. Sustainability is becoming increasingly material to investment outcomes. …
Source: BlackRock
Why Black Rock is now the ‘fourth branch of government’
When the Federal Reserve needed Wall Street’s help with its pandemic rescue mission, it went straight to Larry Fink. The BlackRock cofounder, chairman, and chief executive officer has become one of the industry’s most important government whisperers.
In contrast to other influential financiers who’ve built on ties to President Trump, Fink possesses a power that’s more technocratic. BlackRock, the world’s largest money manager, can do the things governments need right now.
The company’s new assignment is a much bigger version of one it took on after the 2008 financial crisis, when the Federal Reserve enlisted it to dispose of toxic mortgage securities from Bear Stearns & Co. and American International Group Inc.
This time it will help the Fed prop up the entire corporate bond market by purchasing, on the central bank’s behalf, what could become a $750 billion portfolio of debt.
One part of the Fed’s plan is to buy bond exchange-traded funds. BlackRock itself runs ETFs under the iShares brand, and could end up buying funds it manages. There are rules in place to avoid conflicts of interest—for example, it won’t charge the Fed management fees on ETF shares. “BlackRock is acting as a fiduciary to the Federal Reserve Bank of New York,” says a spokesman for the company. “As such, BlackRock will execute this mandate at the sole discretion of the bank, and in accordance with their detailed investment guidelines.”
Still the arrangement is bringing new attention to the company’s scale and ubiquity. “It’s impossible to think of BlackRock without thinking of them as a fourth branch of government,” says William Birdthistle, a professor at the Chicago-Kent College of Law who studies the fund industry.
Source: MSN.com