Is Larry Fink’s 2023 letter an indication that political backlash against “woke” capitalism is working? I’d suggest yes…. And no.

This year, in his annual chairman’s letter released on March 14, Larry Fink addressed investors and CEOs together in one message. After being called out by both sides of the argument when it comes to taking action on climate change, Fink appears to have taken a cautious step back with his words at first blush. And while there are references to sustainability, ESG as a term notably is missing.

Fink opens his letter asserting BlackRock’s continued leadership even as some US states pulled some or all of their assets from the firm’s management….

“While most of our peers saw net outflows in 2022, clients entrusted BlackRock to manage nearly $400 billion in long-term net new assets – including $230 billion in the U.S. alone. These industry-leading results reflect a strong endorsement by our clients of the choices we offer, the advice we provide, the long-term investment performance we have delivered, and the fiduciary standard we uphold.”

And reiterates the importance of investors considering impacts of the transition to a clean energy economy and climate change, equating climate risk to investment risk. Yet, not going as far as to endorse climate risk as financial risk – and, ultimately, potential existential risk for business – as some climate activists may have preferred.

“Investing for the long term requires taking a long-term view of what will impact returns, including demographics, government policy, technological advancements, and the transition to a low carbon economy…. Over the long run, investors also need to consider how the energy transition, among other factors, will impact the economy, asset prices, and investment performance.”

“For years now, we have viewed climate risk as an investment risk. That’s still the case. Anyone can see the impact of climate change in the natural disasters in California or Florida, in Pakistan, across Europe and Australia, and in many other places around the world. There’s more flooding, more wildfires, and more intense storms. In fact, it’s hard to find a part of our ecology – or our economy – that’s not affected. Finance is not immune to these changes. We’re already seeing rising insurance costs in response to shifting weather patterns.”

Fink also emphasizes BlackRock offers choices to his constituents as a fiduciary rather than imposing a point-of-view.

“There are many people with opinions about how we should manage our clients’ money. 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….”

“The transition to a low-carbon economy is top of mind for many of our clients. Our clients have a range of investment objectives and perspectives. We have clients who want to invest in ways that seek to align with a particular transition path or to accelerate that transition. We have clients who choose not to. We offer choice to help clients reach their investment goals, and we manage their assets consistent with their objectives and guidelines.”

Later, Fink advocates for disclosure on climate related risk highlight the balancing act BlackRock must follow because many of their clients are asking for insight into this.

“Many of our clients also want access to data to ensure that material sustainability risk factors that could impact long-term asset returns are incorporated into their investment decisions. This is why we partner with other companies and provide insights into how a changing climate and the transition may affect portfolios over the long term. These clients track the transition to lower carbon emissions just as they track any other driver of investment risk. They want our help to understand the likely future paths of carbon emissions, how government policy will impact these paths, and what that means in terms of investment risks and opportunities. It is not the role of an asset manager like BlackRock to engineer a particular outcome in the economy, and we don’t know the ultimate path and timing of the transition. Government policy, technological innovation, and consumer preferences will ultimately determine the pace and scale of decarbonization.

That’s why BlackRock has been so vocal in recent years in advocating for disclosures and asking questions about how companies plan to navigate the energy transition. As minority shareholders, it’s not our place to be telling companies what to do.”

While the tone of this year’s letter may contrast with those from prior years, especially 2020 when Fink stated the firm’s role was not that of a “passive observer in the low-carbon transition” but rather “as a provider of index funds, as a fiduciary, and as a member of society – to play a constructive role in the transition,” BlackRock is not backing away from its fiduciary mandate to consider climate related risks.

As the ESG acronym has given rise to divisive political views, I’ve been hearing more and more sustainable business leaders in the US say, “I wish ESG would go just away.” And through his 2023 chairman’s letter, Fink may be reminding us that outcomes and impact matter more than terms themselves and measuring outputs.