This was the first year that Fink’s grandiose annual letter was sent to investors; in recent years it had been sent to CEOs. Fink sweeps this under the rug as no big deal, but it serves as a covert admission that Fink and his minions are aware of the dangers those CEO letters created for BlackRock and for Fink himself.

Last year, Fink exulted in his CEO letter that one of his marching orders to American corporations (made in your name, investors) was to speed up their “equity” efforts. Given that equity means illegal discrimination to make up for past illegal discrimination, Fink’s instructions (unless he had – but failed to disclose – some unique definition of equity, which wouldn’t provide him much of a defense) boiled down to a demand that companies BlackRock invests in deny some Americans their civil rights. Conspiring with others to do that is a federal crime. The CEO letter last year rather makes Fink look like a crime boss.

And so this year Fink has shifted the target of his letter to you investors, and was careful not to mention equity. You can bet your bottom dollar, though, that Fink has no intention of ending his campaign. His letter contained nothing to suggest that he’d backed off of equity demands, nor even a definition of equity that might provide some fig leaf of a claim that he’s been using some special definition that doesn’t violate civil rights. And BlackRock was given the opportunity this year (note: by the Free Enterprise Program I direct) to conduct a review to determine if its in-house equity programs violate the civil rights of any employees, but it both declined to do so and will oppose the attempt to have shareholders endorse such a review at its annual meeting this spring.

Fink tries to create a fog through which he can imply that he’s not using all of the assets entrusted to BlackRock to push his personal policy preferences. But here, too, close reading of his letter establishes that nothing will change. Fink facially recognizes his fiduciary duty, sort of, writing that BlackRock “serve[s] each and every client by seeking the best risk-adjusted returns within the investment guidelines they set for us.” Later he asserts that “[a]s minority shareholders it’s not our place to be telling companies what to do.”

This sounds like a huge admission from the guy who bragged about “forcing behaviors” on companies to bend them to his personal preferences about decarbonization and equity-discrimination. But with the next sentence Fink makes clear that all his assertions are smoke, and that nothing will change. “My letters to CEOs [were] written with a single goal: to ensure companies are going to generate durable, long-term investment returns for our clients.” Tie that to his assertion that “it’s critical for CEOs to use their voice in the world – and there’s never been a more crucial time for me to use mine. I will do so whenever and wherever I believe it can serve the interests of our clients and the firm,” and it becomes clear that all of this year’s talk about respecting individual investor preferences and not telling companies what to do is just guff. He’s still going to “force behaviors” by speaking out about his personal policy preferences in ways that give target-company CEOs their marching orders while maintaining a gauzy pretext that everything he personally likes serves investors’ pecuniary self-interest.

After all, despite talk of respecting the “guidelines [investors] set for us,” Fink doesn’t do that at all. At last year’s shareholder meeting he noted that BlackRock offers ESG and non-ESG funds, but then he and his colleagues affirmed that BlackRock uses all of its assets (down $1.7 trillion from that meeting, but somehow that doesn’t call any of his strategies into question), not just the ESG-denominated ones, to push companies to bow to the twin ESG pillars of equity and political decarbonization.

He illustrates the same sleight of hand again in this year’s letter, paying formal obeisance to giving investors options but then considering the interests and concerns of only those investors who agree with his personal policy preferences. In justifying his still being all in on political-schedule decarbonization he notes that “[t]he transition to a low-carbon economy is top of mind for many of our clients,” and then shares as fact a series of climate-alarmist propaganda notes, such as his blithe assertion that “[t]here’s more flooding, more wildfires, and more intense storms.”

That is a deeply challenged proposition, not a solid fact, and even if it were true it would not justify his unwavering, uncritiqued assertion, appearing throughout his letter, that the “transition” to zero carbon is a certainty, with just some details of timing in question. In fact, it’s not at all clear that it can be done at all, that it can be done affordably, or that it’s the wiser course than dealing with the consequences of some anthropogenic global warming. If Fink were really acting objectively rather than according to his policy preferences, the “transition” would be a speculative possibility that should be considered, not a certainty that must be achieved, at any cost, somehow.

So far from objectivity and investor choice, Fink makes one brief reference to investors who are not climate alarmists, but even they are framed as the unloved third cousin of right-thinking decarbonizers: “We have clients who want to invest in ways that seek to align with a particular transition path or to accelerate that transition. We have clients who choose not to.” But in his 9,000+ words he spends none at all considering the risks that those clients might be interested in, such as the risks of moving away from affordable and reliable energy ahead of technological and economic realities, or the real possibility that the best route forward is to respond to any harms that derive from carbon load as they arise, rather than constraining vast arrays of human life and liberty (for people other than Larry Fink and other BlackRock executives and World Economic Forum pals) without even considering those as real costs that have to be balanced.

You better believe that he hasn’t suddenly started restricting his pressuring of executives into dumb decarbonization strategies only with ESG-specific assets, while pressuring them not to decarbonize with the vastly greater non-ESG assets under BlackRock’s supervision – despite the fact that this is the clear way to distinguish between the clients who want political-schedule decarbonization and those who don’t. Fink gives BlackRock investors choices all right, but he respects only the choices made by people who agree with his personal politics.

There’s much else in Fink’s letter that undermines his claim to be a wise investor of other people’s money. According to the logic of his letter, Fink would have done all he could to strangle the Reagan Revolution in its cradle. He appears to think, contra a century of evidence, that industrial policy works, and can even work in a field as dynamic and fast-paced as microchip development. He thinks that what the digital assets industry needs – an industry designed to allow trade at stable exchange rates free from government interference – is greater state regulation and “permissions.” Have no doubt: Fink doesn’t just play a public/private-partnership statist on stages at the World Economic Forum (WEF). He’s the real deal. (On which note: there’s a term for public/private-partnerships designed to order society under plutocratic/bureaucratic direction at the expense of individual liberty. Here’s a hint: WEF Chairman Klaus Schwab’s dad would have been very familiar with the term.)

But the true message of Fink’s 2023 annual letter, from its change of audience to its facial change of tone and its underlying assertion that nothing will change: he knows that he should, as an ethical and legal matter, respect his investors’ desires, most importantly the clear desire of non-ESG investors not to have their assets used to push ESG goals. He knows, but he isn’t going to stop.

Larry Fink is going to continue to run BlackRock – and invest your money – in accord with his personal policy preferences, preferences that include his having significant control over many, many aspects of your, and all of our, lives. Are you sure you want to entrust him with your money?

Very best,

Scott Shepard