Koch vs BlackRock and the War for Fourth Sector Supremacy
WASHINGTON, D.C. – Exxon, BP, Shell and Chevron’s top executives testified Thursday before the House Oversight Committee on Capitol Hill regarding accusations that the big oil concerns misled the world about the environmental risks associated with fossil fuels by spreading disinformation and minimizing the industry’s role in the still hotly-debated issue of global warming.
The “landmark” hearing comes just days before a major UN-sponsored climate summit in Glasgow, Scotland – the COP26–, where member-nations of the UN Framework Convention on Climate Change (UNFCCC) will move to “accelerate action towards the goals of the Paris Agreement” and advance the ten recommendations published in the World Health Organization’s (WHO) COP26 Special Report on Climate Change and Health.
Days before the Congressional inquiry, Blackstone CEO, Steven Schwarzman prognosticated a world-wide energy shortage at a conference in Saudi Arabia, that would lead to “real [social] unrest“. Speaking at the same conference, his BlackRock counterpart Larry Fink, added to the narrative by suggesting that oil would soon reach US$100 a barrel, auguring a period of high inflation and “very unhappy people around the world, in the emerging markets in particular,” as Schwartzman predicts.
Revealing the coordinated nature of these seemingly independent events, the founding father of climate change politics – Al Gore – simultaneously resurfaced after years of relative obscurity to announce the launch of a climate change asset management company in partnership with Microsoft, Goldman Sachs and the Harvard University endowment, among others. In addition, BlackRock disclosed the creation of the world’s biggest climate exchange-traded fund (ETF) on Tuesday, as it continues to leverage its dominance in the private equity space to push for Environment, Social and Governance (ESG) mandates across the corporate sector.
ESG is a pillar of the incipient ‘Fourth Sector’ framework developed at the Rockefeller Foundation’s B Lab, in which the ‘B’ stands for “benefit corporation”; a novel kind of corporate structure designed to integrate the UN’s sustainable development goals (SDG) and other “social responsibility” metrics, such as those on the agenda for COP26, into a company’s stock valuation. The idea is key to the success of “green bonds” and other impact investment initiatives, like those piloted by the Bank for International Settlements’ (BIS) as part of its roll out of CBDC (Central Bank Digital Currencies) and several social impact bond (SIB) startups, such as Sir Ronald Cohen’s Social Finance Israel (SFI).
Paper Challengers
Pushback against ESG mandates has arisen from some unexpected quarters, such as BlackRock’s own former head of sustainable investment, Tariq Fancy, who last May questioned the viability of ESG policies to effectively address the problems it purports to. Fancy’s objections, however, stem from a place of firm commitment to the concept, in general, calling for government intervention to implement strong regulatory oversights in order enforce corporate responsibility.
Fancy now dedicates most of his time to The Rumie Initiative, a non-profit he founded in 2013, which distributes “digital learning” technology to “underserved communities” in Africa and the Middle East. As Alison McDowell has covered in great detail over the years on her blog, education is one of the main verticals being targeted by the burgeoning impact bond market. Among Rumie’s top sponsors is Mark Wiseman, former head of the Canada Pension Plan Investment Board (CPP), which has attracted much controversy after records showed it had funneled millions of the pensioners’ funds to the Israeli defense sector, and Google, which gave the foundation three-quarters of a million dollars to develop its LearnCloud Portal in 2017.
Blackstone’s recently-opened office in Tel Aviv, Israel, is headed by Yifat Oron, whose previous employer of twenty years – her father’s Israeli VC firm – was the main vehicle for the CPP’s investments in the apartheid’s war machine, revealing just one of the many important links between the ostensible challengers to the Fourth Sector paradigm and hinting at the more predictable motives behind the criticisms.
A more recent attack was hurled by a consumer “watchdog” group on Thursday just as the hearings in Washington were about to get underway. In an ad partially aired during a report by CNBC, BlackRock’s investments in China are used to vilify the company, targeting America’s conservative demographic with inflammatory rhetoric, accusing the company of “propping up Chinese communist leaders” and investing “billions” into surveillance companies “used by the Chinese military”.
According the executive director of Consumers’ Research Initiative (CR), the organization that produced the ad, the smear campaign is meant to “send a message to corporate America” that their “misdeeds” will not be covered up by “going woke”, in a somewhat veiled reference to the ESG mandates surrounding oil and gas, and the imposition of diversity quotas in corporate boardrooms. Unsurprisingly, CNBC failed to disclose the group’s affiliations and claimed that it could not “independently verify” the source of the campaign’s million-dollar budget.
However, a quick background check easily solves much of the mystery. William Hild, III, CR’s executive director, is a Koch Industries flunky and former Deputy Director of The Federalist Society’s Regulatory Transparency Project. In 2011, Hild co-founded Cause of Action – a “government accountability” non-profit organization, with Dan Epstein, a product of the Charles Koch Foundation, who served in Trump’s cabinet as part of the Executive Office of the President, in addition to being a member of the Executive Committee of the Administrative Law practice group of the Federalist Society.
Members Only
Last May, Senator Sheldon Whitehouse (D-RI), caused a national stir with a hearing in the Senate Judiciary, that revealed the unprecedented influence of The Federalist Society on the American judicial system, and – by extension, Koch Industries – whose founder, Charles Koch, has been shaping and molding to his wishes and those of his fellow billionaire oligarchs, for the better part of four decades.
As thorough as Whitehouse’s presentation was, exposing how the Koch-funded Federalist Society was able to “remake” the U.S. Supreme Court and practically dictate Trump’s judicial appointments, it is barely the tip of the iceberg for a long-running and ongoing effort mounted many years ago by America’s industrial and financial elites, who resolved to strip government of any power it had to reign in corporate abuses.
Lest we imagine that the Kochtopus’ invectives against BlackRock through one of its many fronts amounts to protecting America’s national interests, it is worth understanding the uses of politics in a country where the laws are made by the corporations. Putting the CEOs of Exxon, BP and the other C-level managers on the Congressional hot seat is a good show for the public. But, few Americans realize that these once-powerful oil companies are now a shell of themselves (no pun intended).
Ever since the creation of the Petrodollar, the oil market’s riches were transferred from the asset holders to the traders, and Koch Industries was one of the pioneers of the energy markets and, along with Enron and others, was the driving force behind their deregulation. They were also pioneers of big data, being among the first to use weather forecasts and other intelligence to develop the algorithms used on its private trading floor to generate obscene profits swapping energy futures.
If anyone can see what the future holds for America, it is Charles Koch, because he is one of the prime architects of its present. Partnering with Google since at least 2010, the Koch “dark money juggernaut” sits at the center of the transition into the data-centered economy. Perhaps before anyone, it was Koch who understood that data was the new oil. Some details might still need to be ironed out at the country club where BlackRock and Blackstone executives play tennis, but you can be sure the rest of us are still not invited.
