California passed a law in August banning the sale of new gas-powered vehicles in 2035. Seventeen states, including Washington, New York, and Oregon, are expected to follow suit.
The same month, President Joe Biden signed the Inflation Reduction Act into law. Despite its name, the bill is the most significant climate action bill in U.S. history and won’t help inflation, non-partisan third-party analysts say.
Biden’s war on fossil fuels and climate change appears to have escalated in the past few months, but it is only the fruition of a yearslong push by the government and a mammoth private-sector investment fund toward electric vehicles as part of a “net-zero” energy-sector agenda.
In his 2022 Letter to CEOs, BlackRock’s CEO Larry Fink wrote in a letter to CEOs earlier this year that “capitalism has the power to shape society and act as a powerful catalyst for change,” but that companies need to work with the state to achieve the desired results.
“When we harness the power of both the public and private sectors, we can achieve truly incredible things. This is what we must do to get to net zero,” Fink said. The letter was only the latest advance in Fink’s yearslong campaign to combine corporate and state power to achieve his climate and political agenda.
BlackRock is advancing its corporate political agenda by accumulating money and exercising power over corporate boards. At the same time, the government is passing laws and regulations that help further BlackRock’s goals.
“In a few short years, we have all watched innovators reimagine the auto industry,” Fink wrote. “And today, every car manufacturer is racing toward an electric future.”
Net Zero Transition
Fink argues governments need to pass certain laws and regulations, and companies like BlackRock need to force change through environmental, social, and corporate governance (ESG).
That’s especially true in the transition to “net zero,” which requires replacing internal combustion engine vehicles with electric cars, according to the International Energy Agency (IEA).
The American public has shown little interest in the matter. In 2017, there were 280,000 electric vehicles sold in the United States, according to the IEA. For comparison, total car sales in 2017 were 17.25 million.
In January 2018, Fink sent a letter to the chief executives of the world’s largest public companies that, in essence, told them to commit to Blackrock’s political and climate agenda or risk losing the mammoth fund’s support. At the time of the letter, BlackRock was the world’s largest asset manager—a ranking it’d held since 2009—and, according to its 2018 Q4 report, had just under $6 trillion in assets under management (AUM).
In other words, BlackRock controlled $6 trillion in other people’s investing dollars and threatened to withhold, or withdraw, investments if companies didn’t bow to BlackRock’s demands of establishing specific environmental, social, and governance (ESG) guidelines.
In his 2020 letter, Fink took it a step further and said BlackRock would significantly reallocate its capital from “investments that present a high sustainability-related risk, such as thermal coal producers,” and screen against investing in other fossil fuels. He followed this with a warning to CEOs.
“Last year BlackRock voted against or withheld votes from 4,800 directors at 2,700 different companies. Where we feel companies and boards are not producing effective sustainability disclosures or implementing frameworks for managing these issues, we will hold board members accountable,” Fink wrote.
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“[BlackRock] will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.”
A major lever in Blackrock’s power arsenal comes from its control over corporate boards. Many corporations are set up so that a part of their board of directors is directly appointed by the top shareholders, who usually hold nowhere near the majority stake—their share could be as low as 5 percent or even less. In addition to the direct appointments, the top shareholders hold major sway over the vote on other board members.
According to Fink’s letter, the company exercised this corporate board power over 2,700 companies, all in pursuit of its political, social, and climate agenda.
Blackrock exercised its power further through strategic investments to advance specific policies and agendas.
Financing the Electric Vehicle Transition
BlackRock invested in all three of the world’s largest lithium mining companies traded on the New York Stock Exchange (NYSE) and put a sizeable amount in Tesla.
Blackrock holds 8 percent of the shares of Albemarle, a U.S.-based mining firm valued at over $33 billion. Blackrock is the second top institutional holder of SQM and FMC, holding three and nine percent of the total stock, respectively.
Tesla is the most influential electric vehicle manufacturer on the planet, with a market cap of over $960 billion. BlackRock, once again flexing its institution might, is the second top institutional holder at Tesla, with around 5.3 percent of total shares.
Anything between five and 10 percent of direct or indirect holdings in a company is considered a “significant shareholding.” It gives the holder a fair amount of power when voting on how a company operates. Consequently, BlackRock has sway in some of the biggest mining companies and Tesla.
State and Corporate Guidance
Fink doesn’t believe companies can, or should, act alone in advancing social transformation.
In May 2021, IEA released the “world’s first comprehensive energy roadmap” that included the requirement that there are no new sales of internal combustion passenger cars by 2035.
The IEA said it intended its roadmap to inform high-level negotiations at the 26th United Nations Climate Change Conference of the Parties (COP26) in November 2021.
At COP26, 153 countries committed to new 2030 net-zero commitments, and “developed countries” committed to delivering a $100 billion climate finance goal by 2035.
COP26 reported that “Private financial institutions and central banks are moving to realign trillions towards global net-zero” because of the new rules, regulations, and climate goals. Months earlier, at BlackRock’s 2021 Future Forum, U.S. Special Presidential Envoy for Climate John Kerry alluded to the need for rules, regulations, and goals.
“Government is going to have to step in and … provide the guideposts and the rules of the road in order to excite that capital and obviously to give that capital the security, the sense of confidence it needs to have in order to make the longer-term investments,” Kerry stated.
At the forum, Kerry also pointed to BlackRock’s leadership in pushing the private sector to meet “climate goals.”
“There is a massive movement in the private sector which we’ve been working with very closely. BlackRock has been a leader in that effort and other American banks, the six largest American banks have been key to putting about $4.16 trillion on the table to help affect and speed up, accelerate this transition.”
As part of BlackRock’s leadership in the “energy transition,” it launched the Future of Transport Fund in September 2018.
BlackRock also launched the Global Renewable Power fund, which invests in infrastructure—something that’s needed to power the electric vehicle transition. BlackRock said it sees a $5 trillion infrastructure growth opportunity over the next 15 years.
These funds are ways to bridge the gap “between where that investment needs to occur … and where the capital currently resides,” BlackRock stated in its Future Forum.
BlackRock launched the Future of Transport fund after Fink sent his 2018 letter to CEOs demanding their companies commit themselves to improving the community and environment. The fund’s most significant jump happened in 2020, the same year Fink wrote to CEOs, stating that a “fundamental reshaping of finance” was underway.
The Temporary Trump Wrench
When Donald Trump defeated Hillary Clinton in 2016, he threw a monkey wrench in the United States’ steady push towards “tackling climate change,” energy scientists bemoaned. And as he implemented an “American First Energy Plan,” energy independence and the stock market soared, while gas prices plummeted. As a result, interest in electric vehicles was marginal.
But when Biden defeated Trump in 2020, BlackRock released a statement saying the win allowed the markets to “return” to where they were before Trump’s victory.
“We see an increased focus on sustainability under a divided government, but through regulatory actions, rather than via tax policy or spending on green infrastructure,” BlackRock stated.
The words “regulatory actions” proved prophetic. Since taking office in 2021, Biden signed several executive orders related to climate regulations and gave the Environment Protection Agency teeth by passing the Inflation Reduction Act.
Meanwhile, Biden’s revocation of the Keystone XL pipeline permit and other anti-fossil-fuel actions have led to skyrocketing gas prices. California joined the movement on the state level with the 2035 ban on the sale of new gas-powered vehicles.
Consumer interest in electric vehicles has increased since 2018, with 36 percent of Americans saying they plan to buy or lease an electric car, Consumer Reports recently found.
BlackRock Signals the Market
BlackRock has positions in 5,832 companies, according to its filings. And in 2021, it had “the strongest organic growth in our history,” generating $540 billion in net inflows (extra cash flowing into a company).
Also, in March 2021, BlackRock joined the Net Zero Asset Managers initiative as a signatory, committing itself to net zero alignments by 2050 or sooner.
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As part of the move earlier this year, BlackRock announced that “an orderly transition to net zero by 2050 would benefit the global economy and our clients in aggregate.” Thus, “by 2030, at least 75 percent of BlackRock corporate and sovereign assets managed on behalf of clients will be invested in issuers with science-based targets or equivalent.”
In response to BlackRock’s move, Mindy Lubber, CEO and president at Ceres, said in a statement, “When the largest asset manager in the world ups its goal from 25 percent of such assets invested in science-based-target issuers to 75 percent of those assets, others should take note.
Lubber added that BlackRock’s new bar signaled to the rest of the market that “they need to adjust their investment strategies accordingly” because “the investor transition to a net zero emissions economy is well underway.”
“Nearly 90 percent of the world economy now has net-zero commitments, while about half of major companies and financial institutions do,” the report said.
The corporate-government push to transition to net zero and electric vehicles is happening, and if companies get in BlackRock’s way, they risk financial loss. BlackRock did not return a request for comment.