BlackRock's ESG Investment Dilemma: Managing Stakeholder Differences

by: Andrew Hoffman

Publication Date: March 9, 2023
Length: 24 pages
Product ID#: 7-238-314

Core Disciplines: Social Impact, Sustainability

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Teaching Note

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In 2018, BlackRock CEO Larry Fink wrote a surprising letter to CEOs across the country stating “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

Now BlackRock is facing pressure from a variety of stakeholders. Republican legislatures are cutting their states’ investments in BlackRock funds, saying that the firm’s “woke investing” is damaging their states’ economies. Environmental groups are protesting that BlackRock is not divesting quickly enough from nonrenewable energy sources. Individual and institutional investors alike are confused by the lack of clear criteria for environmental, social and governance (ESG) funds, and analysts question whether ESG investing is sufficiently profitable.

Students are tasked with helping the CEO regain control of the narrative, and advising where BlackRock should position itself next.

Teaching Objectives

After reading and discussing the material, students should:

  • Understand the foundation and difficulties of ESG investing.
  • Describe the background of BlackRock’s leadership within ESG investing.
  • Analyze the positions of various investment stakeholders.