Blackrock’s former sustainable investment chief has urged his former employer to “face up” to its responsibility in promoting ESG products which have ended up being little more than a “dangerous placebo”.
Writing in City A.M. over the weekend, Fancy, who was formerly chief sustainable investment officer at Blackrock criticised Larry Fink for his “vacuous promises” on ESG.
Despite its promise of helping to decarbonise the economy, Fancy argued that the ESG label has “mislead investors” and done little to promote the causes it claims to support.
ESG may be remembered “primarily as a dangerous placebo that harmed the public interest,” he argued.
Blackrock has been a vocal champion of the ESG label, but Fink dropped the phrase from his 2023 letter to investors because it was becoming politically controversial.
Fancy argued that the speed with which Fink dropped the term showed his lack of commitment to the underlying principles.
“In a sleight of hand that epitomises the insultingly hollow nature of business leaders’ vacuous promises to ethics and responsibility today, Mr Fink has shown no accountability for his words,” Fancy wrote.
“Indeed, as if to throw a banana peel of misinformation over his shoulder, shrug, and walk away, he even refuses to use the acronym ESG anymore!”
He argued that Fink needed to take responsibility for promoting those ideas as the climate approaches a tipping point. “The last twelve months have seen temperature records smashed across the globe,” Fancy said. “At this exact moment, in a race against time, it is dangerous to spew discredited ideas”.
The ESG sector has faced a number of challenges over the past years, including greenwashing scandals, political opposition and diminishing returns.
In the last three months of 2023, global sustainable funds experienced net outflows of $2.5bn, marking the first time ever they have entered negative territory.
Blackrock was contacted for comment.