Alex Epstein discusses Larry Fink and BlackRock with financial journalist

9:02PM Jan 20, 2022

Speakers:

Alex Epstein

Keywords:

fossil fuels

policies

fink

esg

emissions

net

norms

blackrock

letter

governments

companies

regard

greenhouse gas emissions

prescribing

economics

oil

publicly

eliminating

decline

view

I mean, I'm coming from the perspective. That's a minority perspective. In this discussion, though, I think the perspective that's actually being followed in the world that fossil fuels are, are crucial for the present and the foreseeable future. And there's a lot of reason to expect them to expand going forward. And that they will not and should not be rapidly eliminated, as Fink is prescribing. That's, that's, I'm coming from that perspective. And so, yes, he is prescribing that. And so I try to quote in the latest thing, but you know, and I have these highlighted things, but the so he is saying that I'm looking at the quote, committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner. That's a key quote in his letter last year, and that emissions need to decline by eight to 10% annually between 2020 and 2015. Now, this is what he has said, This is what he said a year ago in his letter, but this is their official policy. annually. There's all of humankind's greenhouse gas emissions. And he's not this is a number that he's getting from certain, like climate organizations. It's not that the number isn't particularly controversial, it's just doing the math on we emit a lot today. How quickly is it going to have to decline? And so, you know, my, I think all of his I mean, I think his policies are very wrong for humanity. But the thing I was calling out today was, I don't think it's intellectually honest, to advocate for a policy that requires an eight to 10% annual reduction, starting in 2020. Mind you, and we've already had a significant increase from 2020. And then to say, to oil and gas companies that oh, yeah, you support them in their future. I think those numbers clearly require the rapid elimination of most oil and gas companies. And in practice, what we've seen is a dramatic decline in investment in oil and gas, as well as coal inspired by fake.

Investing. Yeah, I mean, he is the leader of the ESG, movement and energy. And so I have also in, I always have documentation of this stuff. So in my talking points today, and the other ones, I have this fact that from 2011 to 2021, oil and gas exploration, investments declined by 50%.

Or you can just look up the source. At the end, these are all to give you a few look at the EFC you wanted to have that.

The second most recent one, it'll have more statistics. But this one came from the Financial Times now that I look at.

That's a great question. So here's what I mean. He is risk. I think there are two characterizations. He's responding to that he's concerned about. So one is that he is somehow socialist, or fascist in terms of like, wanting government or some quasi governmental entities to control everything in the name of politically correct objectives. So that's obviously one concern, the dysfunction and the other concern, which is the one I wrote about is he is concerned about states that are now passing these policies for pensions and retirement funds to not invest with BlackRock and others that they consider hostile to their state's core industries. So that's why he was this language. You know, the language You saw the letter that I shared, did you see the letter that I shared from him to the oil companies? Or from from the front rather from it wasn't him, but it was it was some of his top people. So that's, that's obviously, so they've been on a publicity tour or items, but it's not. It's not a publicity tour. Sorry. It's a, it's more like. It's like a kind of private PR Tour, where they've been talking to executives and politicians in Texas, so that they so that Texas officials and funds do not stop doing business with BlackRock. And so they are addressing, they addressed that very directly in their letter that they didn't release publicly that I just released. But there, there are a couple of quick references to it in the 2022,

which is many, many states have have these policies at various stages. So yesterday, and a different kinds of backlash. So yesterday, for example, the name is Riley from West Virginia, let me pull it up. The guy. Someone from West Virginia, like publicly announced, you know, we're not doing something in Blackboard, but this is the broad dynamic for the past several years has been coal, oil and gas companies have been very alarmed by pressures, I think that they rightly see is led by Blackrock to stop investing in their projects or to cut investment in their projects. And with, particularly with the Biden administration, they see no allies at the federal level. And so one of their, their main response has been at the state level, to try to pass this kind of legislation that says that state owned investment funds will not do business with financial institutions that are calling for decreasing or ending investment in fossil fuels. Right, and so what they are saying is no, of course not. We're not doing that at all. We love fossil fuel. That's, that's what they say in this letter in in their little private PR tour. And then publicly, they're saying, a tiny bit of that. And my position is, but publicly you're, you're championing the net zero goal that is leading to the disinvestment and all of these things. I mean, no, but the woke is so you know, ESG, the environmental social governance investing, that the woke is more on what the s of that. So it's, it's having certain policies that are like, you know, certain policies toward skin color, certain policies towards gender. And just one if you look at my other article, like I commented on this briefly. And then I have another one that I commented, but if I put just that, you know, I regarded as the premise that that Fink is operating on, which I think is not defensible. But this ESG I think it's I put it as they've so accurately identified, the universal norms of long term value creation, environmental norms, social norms, and governance norms, that imposing those norms on every company is justified. So what you're saying is I'm not being woke. I'm just telling you what every company needs to do to serve its own interests. And my view is you can't identify principles at that level. And so what ends up happening is it just becomes his politics or the politics of people like him that control companies

Yes. Oh, I'm, I'm telling you what's actually in your long term self interest.

Yeah, well, if any, any attempt to identify these universal norms of environmental policy, social policy for all companies, inevitably ends up just becoming the politics of the people prescribing the norms. So like, like concretely, my what's up? Yeah, if you take energy, which is the thing I know about. Larry Fink takes it as a given that it is economically and morally valid to get to net zero by 2050. But this is not the mainstream view and climate economics at all. The mainstream view on climate economics is that that would be disastrous.

Well, but Well, there's the Paris pledging and substance of the Paris pledges not even that zero by 2050. Although there, it's it was 80% reduced emissions by 2050. But even that is different. What governments have agreed to or say they agree to is different from what climate economics says. So, you know, like William Nordhaus, the winner of the Nobel Prize in climate economics is against eliminating all emissions by 2050. Because the idea is that would do far more harm than good. He's against eliminating greenhouse gas emissions by 2050. Because he believes that that would do more harm than good. So he thinks the emissions are harmful. But he thinks the economic harm of reducing them that quickly would be greater. But my and, you know, I, you know, I disagree with Nordhaus from the other side, I think he's under estimating how bad the pulses are. But what I'm trying to point out here is just that Fink is taking his own, like political or ignorant energy view, and treating it as this is the universal truth. When it is a very disputed view. He's trying to dictate the entire world, the financial costs of the whole world around this goal of net zero by 2050, which is not at all agreed on by many of the most thoughtful people.

Yes, they do. Yes, I've done a lot. You know, I mean, that's, that's, well let you in. If you look at my substack I, I've done a couple of these energy, liars. I did one on Anheuser Busch, just. And so I've done a lot on Apple in the past. But yeah, I mean, it's, it's I regarded all as fraud. I mean, that's a different category, like, like, claiming that they are, well, there's two things, there's claiming that you already are net zero, which I regard is unequivocally false for every single or misleading for everyone who claims that, but then there's claiming that they will be by 2050. And that's just, that's just accounting nonsense. And often what it is, is they have these terms called scope one, scope two in scope three, and scope one and two involves the emissions in producing the product. And scope three is what's involved in using the product. And so with so often, oil companies say it will be net zero, which means we'll we won't use fossil fuels to produce fossil fuels. But we'll still produce a ton of fossil fuels, which is like if you were a cigarette company, saying, Oh, we're net zero emissions, because none of our employees smoke. But we're still selling cigarettes. Now. I don't think fossil fuels are the equivalent of cigarettes, but it's, it's BS. So yeah, there's a lot of what I read. I read all of these pledges as as involving wise or completely disingenuous. And I think we've seen that I mean, it fossil fuel use dramatically increased last year. I mean, it's a record high and we're still being held back by pandemic. Well, so the the what's interesting, one thing that's interesting about the net zero corporate movement is that it is far more extreme than what governments are willing to impose. So, in fact, the motivation for this financial movement was very explicit by the original leader Bill McKibben, the environmental activist. And the idea was we failed in politics. So let's, let's use the corporate world to do this. Both we can demonize them, we can demonize them into supporting political policies. But then it's also morphed into let's get our political policies imposed by financial institutions. So governments won't really commit to being at zero in a meaningful way. But let's, let's tell the companies that they have to do that. The ESG stuff is far more extreme than what voters are willing to support. So it's, the rationale is often Oh, voters are going to support this. That's a part of what Finckel saying, he's like, look, of course, every government is going to do this. But that's not happening. I mean, China's increasing its fossil fuel use, India has an alleged target of 27. None of these targets are being met. No one in the US met their targets at all, the US inadvertently half met our targets just because we had a lot of natural gas. But that's not sustainable. Because natural gas still has emissions. So ever, there's just a profound amount of dishonesty about the the reality of these commitments. And one thing I call that Fink for in this last piece was, you know, in his 2021 letter, he said, he China, he only mentioned once and he celebrated their historic commitment zero. I regard that as a crazy thing to say, given that they had look record increases in fossil fuel use in many sectors, despite having being the center of a pandemic. No, I would just say check out the articles and yeah, if I can ever help with just, you know, kind of background on this stuff. Happy to do so. But I'm glad you're asking good questions.