Larry D. Fink may be the most powerful investor in the world. As founder and CEO of BlackRock, he oversees the investment of around $6 trillion – yes, trillion – in funds. When Fink talks, companies listen.
Now Fink appears to be trying to wield BlackRock’s influence for good. In a letter he drafted that he’s sending to CEOs, Fink writes:
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
The New York Times went so far as to say the letter “may be a watershed moment on Wall Street, one that raises all sorts of questions about the very nature of capitalism.”
But if Fink is pushing a new wave of shareholder activism to promote social responsibility, he doesn’t need to go much further than his own company. BlackRock is a huge investor in some of the nastiest industries around – private prisons, fossil fuels, and shady banks, to name a few.
Profiting off of Private Prisons
Private prisons have taken a lot of heat – though certainly not from the Trump administration – for profiting off of mass incarceration and the detention of immigrants. But it turns out that Fink and BlackRock are big investors in the two largest private prison corporations in the US.
(Note to reader: all numbers of shares cited are from the most recent company proxy statements, and all calculations of total share value are based on the January 17, 2018 stock market closing).
BlackRock owns 9,221,074 shares of GEO Group. That’s 12.2% of the company, or $208,672,904. This makes BlackRock the second biggest beneficial owner of GEO Group.
It’s also is the second biggest owner of CoreCivic, the next largest private prison company. BlackRock owns 10,224,486 shares of CoreCivic, or 8.7% of the company, which is a total of $227,188,078.
All told, BlackRock owns just under a half billion of the two biggest private prison companies in the US.
Dirty Fossil Fuels
BlackRock is also a huge investor in fossil fuels. It currently holds hundreds of millions of fossil fuel industry shares that are worth tens of billions of dollars. This comes at a time of a growing global cry for businesses and investors to divest from the industry which is driving climate change.
For example, BlackRock is the second biggest beneficial owner of Exxon Mobil, with 248,696,000 shares, or 6% of the company, which comes out to $21,885,248,000. Exxon, of course, is the fossil fuel behemoth that is also involved in the production of petrochemicals, plastics, and other harmful substances. As is now known, Exxon knew about climate change for decades while pushing practices that exacerbated it.
Fink is also no enemy of fracking. For example, BlackRock is the fourth biggest investor in Range Resources, who has the most drilling wells in the Marcellus Shale region. Black Rock has 13,417,186 shares in Range Resources, or 5.4% of the company, which comes out to $225,140,381.
BlackRock is also a big investor in fracking in Texas and other regions. It’s the biggest beneficial owner of Anadarko, with 42,431,757 shares, or 7.6% of the company, which comes out to $2,502,200,710.
BlackRock is additionally set to profit off of the ongoing oil and gas pipeline boom. For example, it’s the biggest owner of Dominion Energy, the powerful Virginia-based company that’s driving the proposed Atlantic Coast Pipeline. BlackRock owns 46,879,756 shares – or 7.5% – of Dominion, for a total of $3,539,421,578.
And lest one think BlackRock stays away from that dirtiest of fossil fuels, it is the biggest beneficial owner of Cloud Peak Energy, the third biggest coal producer in the US in 2016. BlackRock owns 4,417,116 of Cloud Peak, or 5.9% of the company, a total of $24,294,138.
Fink tells companies to ask themselves: “How are we managing our impact on the environment?” It seems his position to advance environmental sustainability is quite strong – if he chooses to leverage it.
BlackRock is also a major investor in some of the biggest banks in the world – including ones that profited from the 2008 housing crash, fund private prisons and fossil fuels, and have engaged in fraud against their own customers.
BlackRock is the biggest beneficial owner of Goldman Sachs stock. It holds 24,381,642 shares, or 6.13% of the company, which comes out to $6,184,403,493. It’s also the third biggest beneficial owner of the scandal-ridden Wells Fargo, with 280,518,866 shares, or 5.6% of shares, which comes out to $17,919,545,160.
It’s Your Move, Larry
Larry Fink’s call for more socially responsible business models is a welcome gesture, especially given the concentrated power that big corporations hold over all our lives. And we’ve seen recently in the disbandment of Trump’s CEO councils how top executives can be forced to respond to pressure from below. But whether or not Fink will use BlackRock’s power to advance economic security, climate sustainability, and social justice remains to be seen.