Dive Brief:
- BlackRock on Thursday reported a 16% decline in profit during the third quarter year-over-year, citing slumping asset prices and a downturn in performance fees. Adjusted profit fell to $9.55 per share, a more modest decline than analysts expected.
- While macroeconomic factors such as inflation and market volatility remain “significant concerns” for investors, “more of them are turning to BlackRock for comprehensive solutions to help build more resilient portfolios,” CFO Gary Shedlin said during the company’s third quarter earnings call.
- Shedlin is set to depart from his CFO position after the end of the fiscal year, when he will take on the role as vice chairman, BlackRock announced Oct. 3. Martin Small, head of the company’s U.S. Wealth Advisory, will take on the CFO position likely around Mar. 1, 2023.
Dive Insight:
BlackRock also reported a 16% drop in assets under management (AUM) year-over-year due to a steep drop in performance fees, noting that its $7.9 trillion in AUM fell short of analysts’ expectations of $8.3 trillion.
The world’s largest asset manager reported revenue of $4.3 billion for the quarter, a 15% drop year-over-year, in part due to the stronger dollar and the subsequent weakening of investments in key markets such as Asia and Europe.
During the company’s earnings call Thursday, BlackRock CEO Larry Fink emphasized the asset manager’s ability to provide its clients with resilient portfolios in times of economic uncertainty. The company’s technology solutions “provide clients with more choice to address their unique priorities,” he said.
Company executives also noted that BlackRock ensures investor choice through its environmental, social and corporate governance (ESG) policies. The company has come under fire from both Republican and Democrat political leadership for its approach to ESG. Executives on the call reiterated the company’s committment to investor choice.
BlackRock’s decision to allow some investors to exclude fossil fuel investments has attracted the ire of Republican lawmakers while legislators in Democrat-led states are expressing concern the asset manager is walking back its commitment to combat climate change.
New York City Comptroller Brad Lander shared a letter addressed to Fink on Sept. 21 where he expressed concern that the company “is backtracking on its climate commitments, to the detriment of its portfolio, New York City’s pension funds, and our planet.”
Meanwhile, Louisiana State Treasurer John M. Schroder informed the company that the state would be liquidating all BlackRock investments by the end of the year due to what he terms as the company’s “anti-fossil fuel policies.” Schroder announced the decision in an Oct. 5 letter to Fink.
“This divestment is necessary to protect Louisiana from actions and policies that would actively seek to hamstring our fossil fuel sector,” the letter reads. “In my opinion, your support of ESG investing is inconsistent with the best economic interests and values of Louisiana…Simply put, we cannot be party to the crippling of our own economy.”
Republican-led states including Arkansas, North Carolina, Utah and Louisiana have collectively divested more than $1 billion in BlackRock investments in protest over the company’s ESG policies, according to an Oct. 9 report by the Financial Times.
Fink pointed out Wednesday at an Institute of International Finance meeting that BlackRock still invests in energy and gas companies, according to a Thursday report by Fortune.
Fink remarked during the meeting that he is “now being attacked equally by the left and the right, so I’m doing something right, I hope” regarding the company’s ESG policy approach, according to the Fortune report.
