The end of ESG? BlackRock admits adverse effects in SEC filing

BlackRock’s penchant for ESG is already coming back to bite it in the behind. In its annual filing with the Securities and Exchange Commission, the financial behemoth openly admitted its ESG activism poses a serious risk to its business. In the company’s words, the House of Cards could tumble “if BlackRock is not able to successfully manage ESG-related expectations.”

I was almost excited to see BlackRock openly admit its obsession with ESG is a problem — until I realized the company seems to be more worried about its image than the well-being of its clients. BlackRock’s ability to attract and retain customers is certainly a valid concern for the company.

While it’s too soon to have much reliable data on the long-term effects of ESG — investing, after all, is a long game — one particularly well-constructed study on university pensions offers a serious warning. Between limited diversification and ESG’s higher fees and compliance costs, researchers found that schools’ funds would suffer significantly.

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