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SUPPLEMENT
No. 33September 5,
2020
Discussion
on the Direction
of the Economy
• The
Green
Face of BlackRock
- Peter Ewart -
For Your Information • New
Self-Serving Definition of
"Fundamental Corporate Commitment"
• The Neo-Liberal Definition of a
"Stakeholder"
Discussion
on the Direction of the Economy
- Peter Ewart -
"The Great Reset"  At a time when
youth, workers and people all over the globe
have deep concerns about climate change, the environment, and the
political and economic system itself, influential factions of the
global financial oligarchy are calling for a "Great Reset" of the
financial system in the wake of the COVID-19 pandemic; or to put
it another way a "better" or "repurposed" capitalism, one which
can supposedly ensure its preservation. Such calls for a
"systemic change" and a return to "stakeholder capitalism,"
especially in regards to climate change, are coming from various
organizations of the North American and European oligarchies
including the World Economic Forum,[1][2]
U.S.
Business Roundtable,[3]
Climate Action 100+,[4]
and
other oligarchic bodies.
A key promoter of this
thrust has been BlackRock and its CEO
Larry Fink. BlackRock is the world's largest asset manager and
super-cartel with substantial shares in most of the top 300
corporations in North America and Europe, and a co-owner of over
17,000 corporations and banks worldwide. Most recently it has
been appointed by the U.S. government and Federal Reserve to hand
out hundreds of billions of public dollars to chosen financial
institutions and corporations -- many in which BlackRock has
investments -- in what has been described as the largest transfer
of wealth in history. The company is also a key advisor to the
Bank of Canada in its corporate bailout program. BlackRock
Letters to CEOs and Clients
Every year, Fink and BlackRock send out letters to CEOs of
BlackRock associated companies and financial institutions, as
well as other clients. In his 2018 letter to CEOs, Fink commented
that "society is demanding that companies ...serve a social
purpose" and that without such a purpose "no company... can
achieve its full potential." He further argued that how well a
company manages ESG (Environmental, Social & Corporate
Governance) issues "demonstrates the leadership and good
governance that is so essential to sustainable growth."[5]
This was followed up more recently with another letter to CEOs
in January of 2020 titled "A fundamental reshaping of
finance,"[6]
and which to
some represents a fundamental shift of the company's focus on
environmental matters to a more "green" approach. According to
one analyst, this letter "sent shockwaves through corner offices"
of corporations across America, given that BlackRock can exert
substantial pressure through its sheer size and influence by
pulling funding from companies and financial institutions that
aren't toeing the line in regards to the environment,[7] as
well as using other pressure
tactics at its disposal. Of course, it will be BlackRock, the
super-cartel and global enforcer, that ultimately decides the
criteria by which such determinations will be made. Not
surprisingly, some factions of the financial oligarchy,
especially in the energy sector, are not happy about this
development. BlackRock -- "Climate Risk Is
Investment Risk"
 In this letter,
Fink notes that climate change has become "a
defining factor" in the long-term prospects of companies, that
"awareness is rapidly changing," that millions of people have
taken "to the streets" and that the "evidence on climate risk is
compelling investors to reassess core assumptions about modern
finance." He gives examples as to how climate risk will "impact"
the physical world and the global financial system. "Will
cities," he asks, "be able to afford their infrastructure needs
as climate risk reshapes the market for municipal bonds? What
will happen to the 30-year mortgage -- a key building block of
finance -- if lenders can't estimate the impact of climate risk
over such a long timeline, and if there is no viable market for
flood or fire insurance in impacted areas?"
According
to Fink, such questions "are driving a profound
reassessment of risk and asset values" and will result in "a
significant reallocation of capital." In that regard, BlackRock's
responsibility is "to help clients navigate this transition." His
conclusion is that "sustainability and climate-integrated
portfolios can provide better risk-adjusted returns to investors"
and that "sustainable investing is the strongest foundation for
client portfolios going forward." In other words, "climate risk
is investment risk" and a "green" and "sustainable" focus will
result in better financial outcomes for investors. Thus the logic
of his argument is caught up entirely in the framework of making
a profit for BlackRock and its clients. However, Fink does not
explain what will happen to this "green" focus if realizing a
profit is no longer possible. Nor does he explain that it is the
same relentless pursuit of maximum profit in the past by the
oligarchy, and which is inherent in the financial system, that
has created today's environmental problems in the first place.
Fink himself has been a big advocate of deregulation which many
believe has allowed financial institutions to run wild over the
years and corporations to pollute indiscriminately. BlackRock
and Stakeholders
In any case, to achieve long-term profits, Fink argues that a
company must consider "the needs of a broad range of
stakeholders." He gives a number of negative examples including
"a pharmaceutical company that hikes prices ruthlessly, a mining
company that shortchanges safety, a bank that fails to respect
its clients -- these companies may maximize returns in the short
term." But, he argues, "as we have seen again and again, actions
that damage society will catch up with a company and destroy
shareholder value." He goes on to say that, "by contrast, a
strong sense of purpose and a commitment to stakeholders helps a
company connect more deeply to its customers and adjust to the
changing demands of society" and that "ultimately, purpose is the
engine of long-term profitability." In a third
letter issued to clients in 2020,[8]
this time from BlackRock's Global
Executive Committee, the claim is repeated that
"sustainability-integrated portfolios can provide better
risk-adjusted returns to investors," and that includes "striving
for more stable and higher long-term returns." In a recent
report, BlackRock defines sustainable investing as "combining
traditional investing with environmental, social and
governance-related (ESG) insights to improve long-term outcomes
for our clients."[9]
It
further claims that during this year's economic downturn
ESG-titled portfolios outperformed their non-sustainable
counterparts and this promises to be a growing trend, i.e. it is
"a long transition just getting started." This "dynamic" is
expected to accelerate, Larry Fink says, "as the next generation
takes the helm of government and business."[10]
BlackRock and "Sustainability"
To move the process forward, BlackRock claims to make
"sustainability" its standard building block in client investment
portfolios, whether through its passive investment programs (such
as index funds) or its active investment programs, which include
mutual funds and which feature portfolio managers. In that
regard, BlackRock currently offers more than 150 sustainable
funds and investment instruments for its clients.[11]
The firm also claims that it will reduce ESG risk in its
active investment strategies, such as cutting back or ending
investments in thermal coal producers, while at the same time
expanding investments that "support the transition to a
low-carbon economy." As part of its stewardship, BlackRock aims
to hold client companies to account through proxy voting and
other pressure tactics regarding how well they are disclosing and
managing sustainability-related risks and how transparent they
are in their stewardship practices. So far this year, according
to news reports, BlackRock has taken material actions against
management at 53 companies (mostly energy related) over climate
concerns. These actions included "siding with shareholders on
their proposals, voting against board members and raising
governance concerns." In addition, BlackRock has put another 244
companies on notice for making "insufficient progress integrating
climate risk into their business models or
disclosures."[12]
According to the second 2020 letter, Fink says that BlackRock,
working with other index providers, plans to expand and improve
sustainable index investment instruments, adding to those that
the company already has in place. At the same time, the
corporation believes that many clients will continue to prefer
"traditional" investment strategies. It also recognizes that
"while the low-carbon transition is well underway, the
technological and economic realities mean that the transition
will take decades" and that "global economic development,
particularly in emerging markets, will continue to rely on
hydrocarbons for a number of years." As a result, the portfolios
it manages "will continue to hold exposures to the hydrocarbon
economy as the transition advances." BlackRock --
"Having its Cake and Eating It Too"
And so it is that BlackRock aims to have it both ways, to have
its cake and eat it too. It wants to appear to be addressing the
demands of youth and other sections of the people for climate
change solutions, but to do so in ways that are profitable for
BlackRock and its clients -- in spite of the fact these will end
up perpetuating the problem. The company pulls this off by
appearing to take action against some polluters, such as thermal
coal, as well as providing sustainable funds for "green
investments" for environmentally conscious investors. But, while
doing so, it pledges to continue to provide investment vehicles
and support for many years to come for chosen polluters in the
oil & gas sector. Thus it will amass profit from both the
"green"
side and the "polluter" side of the equation. And
the same configuration holds true in other ESG areas like
war production. BlackRock will now be providing investment
"baseline screens" which will allow investors to put money in
BlackRock managed funds which screen out companies that
manufacture controversial weaponry like landmines, cluster bombs
and depleted uranium.[13]
All the while, with other "less clean" funds and investments, it
will be continuing to support major weapons manufacturers like
Boeing, Lockheed Martin, and Northrop Grumman. As one critic put
it: "Funding war and the nuclear arms race, or promoting social
responsibility? It's not possible to do both at the same
time."[14]
BlackRock's Terrible Record
Indeed, there is a savage irony in BlackRock presenting itself
as a "green" or "progressive" force on the world stage. For many
critics, the super-cartel has a terrible record in regards to
climate change, as well as on environmental and other social
issues in general. For decades, BlackRock has been a top global
investor in major polluting industries and war production
companies, and has operated as a huge cartel with other asset
managers and financial institutions. In that regard, it has one
of the worst corporate voting records on climate issues. Between
2015 and 2019, BlackRock opposed more than 80 per cent of climate
change-related motions at fossil fuel companies in which it has a
stake.[15]
As a result,
some environmental groups have labelled BlackRock as the "biggest
driver of climate destruction on the planet" and its sustainable
initiatives as nothing more than "green wash."[16]
"A License to Operate"On
June 23 and
24, BlackRock convened its first Global Summit focused on
sustainability which attracted 3,000 "investment professionals"
from 60 countries. At that Summit, Larry Fink was interviewed and
revealed some of the rationale behind BlackRock's recent adoption
of its "green face." In the course of the interview, he expressed
the worries and concerns of the global oligarchs about the
stability of the financial system and their need to head off any
threats to it. For example, Fink stated that "in this period of
time where globalization is being questioned and we are seeing
more nationalism in every country, for multinational companies
more than ever before, we are going to have to prove that we
deserve a license to operate in every country we are working in
and ... prove [to] every society that we are doing the best we
can."[17]
BlackRock and P3s
In the above interview, Fink indicated that global oligarchs
like BlackRock will be prioritizing "public-private partnerships"
(P3s), as the path forward in addressing climate change and other
ESG issues. Instead of government using public funds to finance
the infrastructure that is needed to address climate change, Fink
argues that private corporations like BlackRock and others should
finance and manage such projects using the large pools of private
funding available. He phrased this to sound as if the financial
oligarchs will be carrying out this investment to "help"
government and, by extension, society itself. He claims that this
"help" will free up government to invest in other ESG projects,
such as anti-racism campaigns, solar energy installations, etc.
According to him, P3s should be at the top of every government's
agenda, whether federal, provincial or municipal. However, he did
not explain that P3s are "pay the rich" schemes that result in
the privatization of public infrastructure and higher costs of
construction, as well as increased taxes, tolls and user fees
imposed on the population. P3s are one of the main means by which
the global oligarchs are swallowing up and taking over the
operations of the state in many countries. In that regard, the
"progressive" oligarch Fink is known for pushing for the
privatization of the entire social security system in the US.
A Thing Cannot Escape its Essence
What is left unsaid in Fink's remarks is that BlackRock and
the globalized oligarchs do not want youth, workers and other
sections of the people to have their own agenda on climate change
and other social and political issues, but rather to give up
their agenda and line up behind the program of the global
oligarchs who trumpet a "reset" and "stakeholder" capitalism.
What has been the main cause of global environmental and other
problems has now magically become the solution. But
a thing cannot escape its essence, no matter how much
"resetting" or "greenwashing" is attempted, and no matter whether
it is BlackRock or the financial system itself. For
further information on BlackRock see
TML Weekly June 13, 2020.
Notes 1.
"Why
we need the 'Davos Manifesto' for a better kind of
capitalism," Klaus Schwab.
2. "The
Great Reset: A unique twin
summit to begin 2021." 3. Business Roundtable, "Statement
on
the purpose of a corporation," June 14, 2020.
4. Climate Action
100+, Global
investors
driving business transition. 5. "BlackRock's
2018 CEO letter: A new
'sense of purpose' for corporate America?" Lexology, January
24,
2018. 6.
"A
fundamental reshaping
of finance," Larry Fink, BlackRock, January 2020.
7. "BlackRock
C.E.O. Larry Fink: Climate crisis will reshape finance," Andrew Ross
Sorkin, New
York
Times, January 14, 2020. 8. BlackRock's Global Executive
Committee, "Sustainability
as BlackRock's new standard for
investing," January 2020. 9. BlackRock, "Sustainable
investing:
resilience amid uncertainty," 2020. 10. "BlackRock
C.E.O. Larry Fink: Climate crisis will reshape finance," Andrew Ross
Sorkin, New
York Times, January 14, 2020. 11. BlackRock, "BlackRock
hosts Global
Summit focused on sustainability," July 8, 2020.
12. "BlackRock
voted
against management at 53 companies over climate concerns,"
Declan Harty, S&P
Global, July 14, 2020. 13. BlackRock, "BlackRock's
baseline
screens in Europe, Middle East and Africa."
14. "BlackRock:
Funding war, preaching social responsibility," William
Hartung, Medium.com, May
11, 2018. 15.
"Activists
respond
to BlackRock's climate change investment strategy: 'There are
questions left unanswered," Emma Newburger, CNBC,
January 16, 2020. 16.
Wikipedia, "BlackRock,"
accessed May 26, 2020. 17.
"A
conversation
with Larry Fink: A fundamental reshaping of finance,"
Francine Lacqua, from the
BlackRock Global Summit 2020, Bloomberg TV.
For Your Information
In August of 2019, the U.S. Business Roundtable, made up of
nearly 200 of the country's largest corporations and banks,
issued a new "Statement on the purpose of a
corporation."[1]
For a
number of decades, the Business Roundtable has endorsed
principles of shareholder primacy -- that corporations exist
principally to serve shareholders. In this, they were following
the dictum of the economist Milton Friedman that "the one and
only social responsibility of business ... is to increase
profits." However, the Business Roundtable appears
to have changed its
tune. In the Preamble to the new statement, it now claims that
the language of the old one regarding responsibility "does not
accurately describe the ways in which we and our fellow CEOs
endeavor every day to create value for all our stakeholders,
whose long-term interests are inseparable." It goes on to say
that "While each of our individual companies serves its own
corporate purpose, we share a fundamental commitment to all of
our stakeholders," i.e. not just shareholders. In
the statement, the CEOs, who represent many of the biggest
corporations in the U.S. such as BlackRock, Vanguard, Apple,
American Express, Lockheed Martin, Goldman Sachs, Walmart,
Bechtel, Boeing, and Exxon, and others, now pledge commitment to
a range of "stakeholders" by "delivering value to our customers
... investing in employees [which] starts with compensating them
fairly and providing important benefits ... dealing fairly and
ethically with our suppliers ... supporting the communities in
which we work ... protect[ing] the environment by embracing
sustainable practices across our businesses." And, at the very
end of the list, is "generating long-term value for
shareholders." Indeed, there have been various
phases over the last 100+ years as
to how the oligarchs have described their purpose, depending on the
arrangements necessary at the time to advance their interests
and
the "spin" that goes along with it. For these CEO proponents of
American pragmatic theory, there is no objective reality. Truth is what
"works" in their interest and, to them, reality is only a construct.
Thus the financial oligarchy can conjure up new "realities" about the
aims and purpose of their enterprises. But once one of these realities
stops producing the results they desire, another must be
substituted in order to continue to advance their interest. Thus the
Business Roundtable CEOs can claim with all certainty one year that
their rapacious monopolies serve only shareholders and now say they
serve "stakeholders" including workers, suppliers,
communities and
so on. For these CEO proponents of American
pragmatic theory, there
is no objective reality. Truth is what "works" in their interest
and, to them, reality is only a construct. Thus the financial
oligarchy can conjure up new "realities" about the aims and
purpose of their enterprises. But once one of these realities
stops working or is discredited another must be substituted in
order to continue to advance their interest. Thus the Business
Roundtable CEOs can claim with all certainty one year that their
rapacious monopolies serve only shareholders. Yet the next year,
the leopard spots magically change, and the monopolies claim to
"create value" for a range of stakeholders which includes
workers, suppliers, communities and so on. Besides
obscuring that it is the working people acting on
nature who create all new value, what this pragmatic thinking and
demagogy covers up is that the current financial oligarchy has
had two fundamental aims since the rise of the monopoly
capitalist system and imperialism at the beginning of the 20th
century. These are: 1) striving for maximum profits by
whatever means necessary; 2) preserving, maintaining and
expanding their exploitive system, both nationally and
internationally. Why are these CEOs resetting their
avowed purpose now? When
Milton Friedman's dictum of shareholder primacy was adopted back
in the 1980s and '90s, this was actually a time when the
financial oligarchy had launched a renewed offensive against the
workers and people of the U.S., Canada and the world using
neo-liberal dogmas, like the claim of shareholder primacy, as
justification to slash wages and pensions, privatize public
institutions, cut social programs, and other anti-social
behavior. "Greed is good," was a Friedman-like mantra of that
time and pursuit of private interest was presented as the highest
virtue. Today, in 2020, the financial oligarchy is
also on a renewed
offensive, but the conditions are different than the 1980s. In
order to achieve maximum profits and preserve the system, it must
further loot the huge reservoir of social wealth created by
working people in the U.S. and abroad. This looting has been
going on in direct and indirect ways since the rise of monopoly
capitalism many decades ago. But in the wake of the 2008
financial crisis and now the COVID-19 debacle, it has been ramped
up to an unprecedented degree. Herein lies the
dilemma for the Business Roundtable CEOs.
How can they justify following the Friedman dictum of being only
responsible to their wealthy shareholders, yet going, year after
year, with outstretched palms to demand literally trillions of
dollars from the public purse? No, the CEOs must now proclaim that they
have found a new "social responsibility" to all the "stakeholders" in
society; and thus, in turn, the implication is
that society must be prepared to permanently backstop the big
banks and corporations with trillions of public funds, through
bailouts, public-private partnerships, privatizations, subsidies,
tax cuts and other means. The Roundtable's
statement lies within the recent thrust of
the Davos World Economic Forum to push for "stakeholder
capitalism" and a "better kind of capitalism." The billionaires
of Davos want all of civil society to fall in line behind their
agenda, as do the CEOs of the Roundtable. Above all, they do not
want an alternative agenda to develop that is put forward by an
empowered working class and people. Despite all their talk
about "social responsibility," the oligarchs continue unabated to
exploit the very "stakeholders" they claim to be serving. The
leopard has not and cannot change its spots. Note
1. "Statement
on
the purpose of a corporation," Business Roundtable, June 14,
2020.
The definition of a "stakeholder" is recycled from
the days of Tony Blair when he spread the "Third Way" thesis of a
"stakeholder society" to hook the people onto the illusion that
somehow they have a say on the decisions which affect their
lives. Reproduced
below is an extract of an article published by
Workers' Forum in 1997 titled "What is a
Stakeholder?" [...] According to this
vulgar materialism, society is not
composed of classes but of "stakeholders." The motive force for
development is not the class struggle but the seeking of a
"balance" between these disparate "stakeholders." At the level of
an enterprise or a sector such as education or health care, all
human beings are presented as stakeholders. Class differences
vanish before the commonness of being a "stakeholder."  The problem, of
course, is that only the bourgeoisie can have
a stake in capitalism but it cleverly wants to convince the
working class and people that they also have a stake in
capitalism. In fact, the only stake the working class has in
capitalism is to overthrow it and build socialism. It matters
little to the working class that there are those who do have a
stake in capitalism: stockholders, management, certain consumers
and customers, suppliers, governments, big business and the
enterprises of big labour. A worker knows instinctively that all
of the above have a stake in the capitalist system that they wish
to defend. They all merge and form the "unity of stakeholders"
according to the logic being advanced by the ideologues of the
bourgeoisie at this time.
A worker also knows
instinctively that these "stakeholders"
work together with the aim of creating "values" in an enterprise
from which they profit, while on a grander scale they work
together to restructure the entire society to fit their schemes
of being competitive in the global market. Workers
are supposed to forget all this, even though they
realize it instinctively. Against all logic, they are supposed to
declare themselves as "stakeholders" in the capitalist system. The
capitalist system, which develops through the violent destruction
of the productive forces and has created an ever-increasing
standing army of unemployed and an exploding number of poor, is
now supposedly going to help a worker because that worker has
become a "stakeholder" in capitalism! They are supposed to
abandon class struggle and deny class antagonisms; they are to
believe that everything will be looked after when a "balance" is
struck between various "stakeholders."  The bourgeoisie
applies the same logic to the attempt to get
teachers, parents and others to declare themselves "stakeholders"
as concerns education; or doctors, nurses and hospital personnel
as concerns the health care system, and so on. As stakeholders,
parents are supposed to support the deficit-reduction targets and
"pitch in" to make all the changes work smoothly -- all for the
sake of the future of their children and society. The aim of the
bourgeoisie and its governments to completely destroy the system
of public education or public health is supposed to be accepted
by the people under the hoax that they too are "stakeholders." If
they do not do "their bit" to achieve the "balance" between the
various "stakeholders," then they are branded as troublemakers,
or those who "do not want a bright future for society." Every
attempt is made to isolate them.
The intent of this
thesis is to make sure that there is an
alliance at the base of society of workers and capitalists alike
in whose interest it will be to defend the capitalist system and
go to bat for the bourgeoisie in its campaign to restructure
everything so as to make Canada "the greatest country in the
world in which to live". This is a euphemism for making the
Canadian bourgeoisie competitive on global markets so that it can
realize maximum capitalist profit. Instead of
contributing to setting a new direction for the
economy, the working class is supposed to keep busy defending
the
very system that is the root of its exploitation and oppression.
Instead of developing antagonism against private property and the
exploitation of persons by persons, the workers are supposed to develop
antagonism against those who wage the class struggle against the
capitalist system and to open society's path to progress.
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