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BlackRock has thrown its weight behind a coalition of US police and fire labor groups pushing to get politics out of pensions in its latest effort to overcome opposition to environmental, social and government investment.
The world’s largest money manager is the only financial group among the founding members of the Alliance for Prosperity and a Secure Retirement, a Delaware-registered nonprofit that warns on its website that “politics have no place in Americans’ investment decisions.” After coming under fire for its advocacy of sustainable investing, BlackRock has increasingly emphasized the primacy of investor choice.
A handful of small business and consumer nonprofits are also members of the alliance, which launched earlier this year amid a flurry of ESG-related activity. The 44 state legislatures considered 162 bills in 2023, and 76 more have been introduced this year, according to law firm Ropes & Gray. Roughly 80 percent of the proposals sought to prohibit the consideration of sustainability factors, while the remainder actively promoted it.
“We are not pro-ESG. We are not anti-ESG. We’re ‘for’ letting investment professionals who have a fiduciary duty to their beneficiaries do the job they’re supposed to do,” Tim Hill, a former Phoenix firefighter who is president of the alliance, told the Financial Times. . “We are ‘anti’ politicians, whether on the right or the left, interfering with this fiduciary duty so that they can carry out a political and social agenda.”
Hill said the group was formed to rally pension industry participants for support. “We decided to try to use this different way of getting the industry to help us, primarily in the financial burden of suppressing and protecting our funds and fund managers,” he said.
In a statement, BlackRock said it was “proud” to support the alliance, adding: “As a fiduciary, our mission is to help more people experience financial well-being at all stages of life. The Alliance is one of many BlackRock-supported organizations committed to helping more Americans retire with dignity on their own terms.
The 10.5tn money manager has been at the center of a policy battle over ESG since 2020, when CEO Larry Fink beat the drum for sustainable investing, pledging in his annual letter that “sustainability will be an integral part of portfolio construction and risk management”. . . governments and the private sector must work together for a transition that is just and fair”.
BlackRock has become a target of both Republican politicians who protested what they described as “awakened capitalism” and progressives who wanted the firm to go further and force its investees to decarbonize.
Over the past three years, BlackRock’s management has become much more skeptical of climate-related shareholder proposals. She voted against most of them last year, saying others were too prescriptive or not in the financial interests of her clients. At the same time, assets in the firm’s largest ESG fund have halved since the end of 2021.
BlackRock overhauled its lobbying and public relations operations last year, and Fink is placing much greater emphasis on pension policy and infrastructure investments. He used his 2024 letter to warn of a looming retirement crisis caused by changing pension and work patterns.
BlackRock’s website lists the Alliance for Prosperity as one of 13 organizations it works with to promote discussion on retirement issues. The group is backed mostly by public safety unions, which have a history of being more conservative on climate and social issues than some of their service industry counterparts. It also includes the Federation of Builders, whose pension funds have $800 billion in assets, including the largest union of electricians in the US.
The group has reached out to more liberal unions, including at least one major teachers union, but so far none have joined.
Hill said labor groups and retirees have been increasingly concerned for several years that politicians view pension funds as “a pot of money that they can use to enact any current political or social agenda”.
“It is always the worker who does the work, pays the political cost and pays the financial cost of defence [pension systems]usually without any help from the rest of the industry,” Hill said.