BlackRock CEO defends stakeholder capitalism, carbon transition

Yahoo Finance’s Andy Serwer joins the Live show to discuss BlackRock CEO Larry Fink’s annual open letter defending stakeholder capitalism and the carbon transition.

Video transcript

BRIAN SOZZI: Blackrock CEO Larry Fink says stakeholder capitalism isn't woke in his annual CEO letter. Let's talk more about this Yahoo Finance Editor in Chief, Andy Serwer. Andy, good to see you this morning. Not surprising, right? Fink has been a long time champion of stakeholder capitalism.

ANDY SERWER: Yeah. That's correct, Brian. The $10 trillion man, that's how much BlackRock has under management these days. And you know, I'm sorry to date myself, but I remember when Larry was just starting that company out. And it has really becomes such a behemoth as an asset manager and a force on Wall Street and a force in our economy and in fact, society, which gets us back to this stakeholder capitalism notion that you talked about, Brian.

And basically, what he was saying in his letter was that you can have capitalism and have appreciation for other stakeholders besides shareholders. That's what stakeholder capitalism is, which is to say employees, communities, customers, the environment, those are the different constituents that he was speaking to.

And I think the point was, a lot of people think that it's an or situation that you either care about the environment or you make profits. That you either care about society and employees and diversity and inclusion or you have profitability. And Larry's big point in this letter is that you can have both. And he sort of went through that, and it was sort of a longer term thing. In other words, to have a sustainable business, you do need to pay attention to those other factors.

JULIE HYMAN: Yeah, and I think also-- listen, I think we can debate his usage of the word woke, and whether it was a good idea not to even bring that into the conversation. But I think he was also sort of making the point that this is not posturing, that this is an effort by BlackRock to make real change. And I was struck on that point by the fact that he also talked about the company's decision to not divest from oil and gas companies.

He said some of our clients want to, and of course, we do it on their behalf. But we don't automatically do that because we think it's a better way to push for change. And then lo and behold, Exxon comes out this morning and says it's going to try and be net zero, net carbon-neutral zero by 2050. I think we can kind of quibble on the details of that, how significant it is. But it is interesting timing, if you will.

ANDY SERWER: Yeah, I love that. I mean, Exxon being carbon-neutral, that's another rabbit hole we can go down to. Although 2050, wow, I'm doing the math about how old I would be trully on that one. But that's a ways off. But anyway--

BRIAN SOZZI: 25, Andy.

ANDY SERWER: Right, thank you. It's a real statement, and you know, I think that he's put a lot of thought into this. And about how by divesting, he'd just be reducing the supply and not the demand. And his point is that you need to reduce the demand of fossil fuels. But I think he is having an impact because, you know, there was a movement in Texas to pass a law, state law, which would mandate that the state wouldn't do business with Wall Street firms that divested from fossil fuels, which I think was in response to some of the statements that Larry Fink had made previously. So this is an ongoing debate.

Obviously, endowments across the country have made this move, and it is controversial because what do you do with a company that is switching to, you know, say wind and solar that also has a business in fossil fuels but wants to get rid of it? I mean, should you encourage them? So this is a timeless debate that's played out at faculty meetings, in college boards, and with student groups all across the country. And then at the highest levels of capitalism, which is to say BlackRock.

BRIAN SOZZI: You know, Andy, just staying on this but looking at it from a different lens, if so many of these executives of very large companies have been pounding the table on stakeholder capitalism really, let's say five years. And then you see the situation over Microsoft and Activision Blizzard, where as part of that deal, Activision's Bobby Kotick gets to keep his job as part of this deal.

ANDY SERWER: Yeah. And this is a vexing one to me. I mean, it's still early days in this deal. And we don't maybe have all the facts, but apparently, Bobby Kotick is going to be allowed to keep his job once Activision Blizzard is a part of Microsoft, the subsidiary, which is surprising-- there's Bobby-- given all of the problems at this company on a personal level for the chief executive, but also, you have to say it, systemically.

And the company has talked about getting rid of as many as 70 employees. Reports suggest that maybe as many as 700 employees were complicit in activities that would be considered untoward, I guess. And the stock has really taken a beating certainly at least in part because of that. And Microsoft, which you know, holds itself up to be a pretty buttoned up company, I would say, or is a button up company, it's sort of surprising that Bobby Kotick is allowed to keep his position going forward. We'll see what happens here over the next couple of days though.

BRIAN SOZZI: Never a dull moment. Yahoo Finance Editor in Chief, Andy Serwer, always good to see you. We'll check back with you later.