UPDATE 2-BlackRock's Fink defends push for companies to value more than profits

·2 min read

(Adds details from letter, updates headline)

By Akriti Sharma and Ross Kerber

Jan 18 (Reuters) - Larry Fink, chief executive of the world's biggest asset manager BlackRock Inc, has defended a shareholder movement that pushes companies to focus on the interests of society as well as profits.

In his annual open letter, Fink built on themes he has sounded in previous January missives to other CEOs, calling on them to find a purpose and to take account of issues like climate change as part of so-called stakeholder capitalism.

"Stakeholder capitalism is not about politics," Fink said in the letter late on Monday, titled The Power of Capitalism. "It is not 'woke.' It is capitalism."

Fink, 69, defended BlackRock's stance in engaging with companies on carbon transition rather than divesting altogether, saying the companies themselves cannot be the "climate police" but instead should work with governments.

"Divesting from entire sectors – or simply passing carbon-intensive assets from public markets to private markets – will not get the world to net zero," he said. "And BlackRock does not pursue divestment from oil and gas companies as a policy."

Overseeing $10 trillion as of Dec. 31, the world's largest asset manager has become one of the most influential voices in U.S. and European boardrooms, making Fink's annual letter a director must-read.

In Monday's letter, Fink unveiled plans to launch a Center for Stakeholder Capitalism to create a "forum for research, dialogue, and debate." The center will help to explore the relationships between companies and their stakeholders, he said.

Fink also said that BlackRock is working to expand an initiative for investors to use technology to cast proxy votes.

"We are committed to a future where every investor – even individual investors – can have the option to participate in the proxy voting process if they choose," he said.

After years of criticism from activists focused on climate and other environmental, social and governance (ESG) issues, BlackRock changed course in 2021 and cast a much more critical set of proxy votes such as backing calls for things like emissions reports or the disclosure of workforce diversity data.

At the same time the fund manager has faced challenges from conservative U.S. politicians. On Monday, West Virginia State Treasurer Riley Moore said his agency would no longer use a BlackRock liquidity fund, where it last kept $21.8 million as of Jan. 6.

In a news release, Moore cited BlackRock's dealings in China and noted "that BlackRock has urged companies to embrace 'net zero' investment strategies that would harm the coal, oil and natural gas industries."

A BlackRock spokesman declined comment. The company in December acknowledged some continued fossil-fuel investment will be needed. (Reporting by Ross Kerber in Boston and Akriti Sharma in Bengaluru; editing by Richard Pullin and Gerry Doyle)

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