Eight trillion dollar asset management firm BlackRock refuses to enforce ESG compliance across all asset allocation strategies. Given my advice to pension funds, I frequently get asked why I support BlackRock’s stance. As if not supporting ESG is a bad and uncaring thing to do. Au contraire.
ESG hinging on sustainability is an evolutionary oxymoron, a grandiose false positive, and should not be endorsed by anyone knowledgeable about evolutionary principles to which investible assets and the future of humanity are beholden. For sustainability does not exist anywhere in the universe. Finance attempting to improve itself by producing its own snake oil, uncorrelated to our growing understanding of evolution, is damaging humanity and finance.
The best way to explain BlackRock’s stance is to compare it with the willingness of a restaurant to put a vegetarian meal on the menu. Even though it is evolutionary proven, especially during pregnancy, humans are omnivores.
BlackRock’s latent support for ESG makes total sense to me. They dabble in ESG because asset owners tell their asset allocator, BlackRock, to put ESG on the menu. Yet it would not be wise for BlackRock to become a proverbial vegetarian restaurant, no longer serving the meat that produces consistent long-term returns across a broadly diversified investment platform.