BlackRock Under Fire for Oil Exec Board Appointment

Asset manager BlackRock’s decision to add a former oil executive to its board has incurred widespread criticism in the global media. Much of it harping on the asset manager’s supposed emphasis on environment, social, and governance (ESG) standards. 

On Monday, BlackRock announced that it had appointed Amin Nasser as an independent director, effective immediately. BlackRock billed the move as an acknowledgment of the Middle East’s role in its long-term strategy. Many pundits and publications are asking: How can socially conscious BlackRock justify its decision?

Nasser Has Spent His Career in the Oil Industry

Nasser joins the company from Saudi Aramco. The largest oil company in the world, with a market capitalization of $2.084 trillion. The 65-year-old Saudi citizen will start his first finance job after a long career solely in the oil sector.

Saudi Aramco is estimated to be the world’s largest single emitter of greenhouse gases. Responsible for over 4% of the world’s greenhouse emissions since 1965.

The company is also fully state-owned by the Saudi national government, one of the most oppressive regimes in the world. The firm is a key national asset for the Kingdom. Saudi Arabia uses the Aramco’s oil wealth to exert influence on the global stage.

Last year, the company saw record profits of $161.1 billion. Numbers that were boosted by soaring global energy prices. 

BlackRock’s CEO, Larry Fink, highlighted Nasser’s “leadership experience, understanding of the global energy industry, and the drivers of the shift towards a low-carbon economy.” 

Some see the appointment as a dramatic reversal in BlackRock’s supposed corporate philosophy. Before this week, Larry Fink and colleagues were at the forefront of global businesses adopting ESG standards.

As Western politics, in particular, has focused ever more on social issues, the C-suite has, in turn, become a greater fan of “stakeholder capitalism.” A kind of capitalism that looks beyond the boardroom and the bottom line assessing its global impact.

However, critics say it’s another way businesses have grown subservient to social justice activists. 

BlackRock Getting Defensive?

Jeff Sonnenfeld, a senior associate dean for leadership studies at the Yale School of Management, told CNBC on Tuesday that Nasser’s appointment would “blur” BlackRock’s image on ESG. Such sentiments are widespread.

Ulf Erlandsson, CEO of the Anthropocene Fixed Income Institute, told Bloomberg the appointment “raises an interesting question.” She added: “This move will trigger some client uneasiness…. How should clients who exclude Aramco from their investment portfolios view the fact that Aramco is becoming an even more important voice at the service provider?”

BlackRock’s latest hire may be a defensive move to assuage conservatives that the world’s largest asset manager hasn’t gone “woke.”

Earlier this year, some US states, including Florida, announced their decision to withdraw state assets managed by BlackRock. In their sights are BlackRock’s green investment policies, with Republican politicians accusing the asset manager of being an enemy of the fossil-fuel industry.

The FUD over Nasser’s addition to the board comes at a highly sensitive moment. BlackRock faces unprecedented scrutiny in its bid for approval of the first United States Bitcoin ETF application.

Shortly after it handed in the paperwork to the SEC, other firms followed suit, including Invesco, Wisdom Tree, Bitwise, and Fidelity. Its application is currently under review, with much of the crypto industry, and the world, watching.