By Ross Kerber and Bo Erickson
BOSTON/WASHINGTON (Reuters) – Often a political punching bag for MAGA Republicans, asset manager BlackRock may have bought some conservative credibility along with its purchase of two critical ports on both sides of the Panama Canal.
The $22.8 billion deal with Hong Kong-based CK Hutchison for those and other ports was hailed by U.S. President Donald Trump in his address to Congress Tuesday night, giving BlackRock and its CEO Larry Fink political capital to get back in Republicans’ good graces.
BlackRock has been restricted, or outright banned, by a number of Republican-led states from managing retirement or treasury funds over the company’s policies on environmental, social and corporate governance (ESG) investing.
Now some red state officials are taking another look.
“BlackRock working with the Trump administration is going to be positive for everybody, I can see that opening up some doors for them,” said Indiana Treasurer Daniel Elliott.
A Republican, Elliott last year helped push BlackRock out of a contract to manage a nearly $1 billion global bond portfolio over concerns about its ESG efforts.
Elliott said he would now be willing to consider BlackRock’s eligibility for future contracts if they were presented to him. Republican treasurers in other states have told him they are also encouraged by BlackRock’s role in the deal, as well as other recent moves by Fink to diminish ESG efforts.
“They’re listening to our issues,” Elliott said of BlackRock.
In an e-mailed statement, Texas Comptroller Glenn Hegar called BlackRock’s port investment “a positive development for Texas given our status as the nation’s top state for international trade.”
Although BlackRock has rejected calls for it to divest from fossil-fuel companies, Hegar had listed BlackRock as “boycotting” the state’s energy industry in 2022 because of factors like its participation in industry net-zero groups. He said the canal deal is “not related” to the process of reviewing which firms will stay on the list, which is ongoing.
GIVE A LITTLE, GET A LITTLE
With $11.6 trillion in assets, BlackRock plays an outsized role among shareholders of its portfolio companies. For a brief period starting around 2021, the company cast more proxy votes supporting proposals on topics like requiring companies to disclose their emissions, but then pulled back.
Since Trump won last November’s presidential election, BlackRock also has left an industry net-zero group and eliminated a boardroom diversity target.
Gernot Wagner, a climate economist at Columbia University, said BlackRock’s role in regaining control over the canal, which was much sought by Trump, should sway some of the president’s political allies.
“Rationally, this is how the world works, you give a little and you get a little,” Wagner said. But Republican leaders and others in Trump’s MAGA movement are eager to follow Trump’s unpredictable lead, making the practical impact on the firm hard to know, he said.
A BlackRock spokesman declined to comment. In a statement announcing the deal, Fink emphasized the commercial reasoning behind it. “We are increasingly the first call for partners seeking patient, long-term capital,” he said.
FINK IS NO COMMUNIST
Some Democratic pension officials have urged BlackRock and other big asset managers to maintain their climate and diversity efforts, but they have put fewer investment restrictions in place.
“Unlike too many of my peers on the other side of the aisle, I do not play politics with our investments,” said Illinois State Treasurer Michael Frerichs, a Democrat, whose office has $1.2 billion in educational savings funds with BlackRock.
Fink estimated in early 2023 that the firm had lost about $4 billion in withdrawals by Republican state officials tied to the anti-ESG backlash. That figure may have tripled since then depending on how state actions are counted, but still represents a tiny slice of business for BlackRock, the world’s largest asset manager.
BlackRock still has work to fully recapture Republicans’ goodwill. In November, Texas Attorney General Ken Paxton and officials from 10 other states sued BlackRock and rival asset managers, alleging they violated antitrust law through climate activism.
Paxton’s office did not respond to questions about what, if any, impact the Panama Canal deal might have on the litigation.
Speaking in Washington, Texas Senator Ted Cruz, the Republican chairman of the Commerce Committee that has been looking into Chinese connections to the Panama Canal, said in a hallway interview with Reuters that he wanted to review the details of the deal but was glad to have an American company controlling the port facilities.
Cruz has been among the leading critics of Fink over BlackRock’s ESG policies. Asked if Fink was back in his good graces, Cruz responded that “He is not a Chinese communist.”
So Fink is better?
“Unequivocally,” Cruz said.
(Reporting by Ross Kerber in Boston and Bo Erickson in Washington, D.C.; Additonal reporting by Suzanne McGee in Providence, R.I.; Editing by Dawn Kopecki and Nick Zieminski)
