Sideways: BlackRock walks a governance tightrope
BlackRock’s contract with the Federal Reserve to support the corporate bond market leaves the world’s biggest asset manager with no room for governance error.
BlackRock’s Larry Fink and New York Federal Reserve president John Williams: Both seem keenly aware that the slightest hint of impropriety in their unusual relationship could cause enormous reputational damage
BlackRock was already under scrutiny after chief executive Larry Fink repositioned the firm in January to place greater emphasis on environmental, social and governance (ESG) criteria.
Fink’s journey from mortgage-bond trading hotshot at First Boston in the 1980s to apostle of ethical investing in 2020 struck many rivals as self-serving and unconvincing, although the strong relative performance of ESG products during the Covid-19 crisis should go some way to dampening those criticisms.
The crisis also saw BlackRock win the most controversial mandate of the year so far, with the appointment of its financial markets advisory group as agent for the Federal Reserve’s first foray into the direct support of the credit markets.