Larry Fink, head of the world's largest asset management firm, reiterated in his annual letter to investors March 15 that BlackRock continues to see climate change as an investment risk while saying that "it's not our place to be telling companies what to do."

The BlackRock Inc. CEO also predicted that high inflation will persist, and Fink warned that unsustainable government spending and deficits pose growing challenges for financial markets.

Fink's 9,215-word letter comes after a year of fierce Republican criticism of BlackRock for considering environmental, social and governance risks and opportunities in investment decisions. Another sore point has been BlackRock's decisions to use its proxy voting power in recent years to support board changes at Exxon Mobil Corp. and shareholder climate resolutions at other companies.

Treasurers and elected officials in several Republican-led states have barred BlackRock and some other firms from state pension funds, saying their corporate environmental and social policies are hurting investors.

In 2022, 95% of large companies reported on their ESG programs and 64% had third-party companies verify such reports, according to an annual study published by the International Federation of Accountants that tracks such trends.

In the letter, Fink indirectly rejected allegations that considerations of climate risks affect investments — or that BlackRock is not putting clients' interests first.

"There are many people with opinions about how we should manage our clients' money," Fink wrote. "But the money doesn't belong to these people. It's not ours either. It belongs to our clients, and our responsibility and our duty is to them."

And today, "the transition to a low-carbon economy is top of mind for many of our clients," Fink wrote.

While many banks and investment firms saw more money flow out of than into their funds in 2022, BlackRock boosted new assets under management by $400 billion last year, including $230 billion in the U.S., the company said.

The company dialed back its engagement on climate change in the last year, announcing ahead of the 2022 shareholder season that many climate proposals had become too "prescriptive" for the company to support. The asset manager remains a leading energy sector investor, pouring nearly $191 billion into fossil fuel holdings between March 2021 and August 2022, one study found.

Even so, much of the criticism against BlackRock comes from officials in fossil fuel-producing states. The U.S. debate over the impact BlackRock and other large Wall Street firms have on corporations and pension funds has also gained traction in Washington.

Congressional Republicans recently joined the growing anti-ESG campaign when both chambers voted to overturn a Biden administration rule that returned to managers of private retirement plans the right to consider ESG factors. President Joe Biden is expected to veto the measure.

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