By Svea Herbst-Bayliss and Greg Roumeliotis
(Reuters) -Tiny activist investor Bluebell Capital Partners is taking aim at BlackRock (NYSE:BLK) and wants to replace longtime CEO Larry Fink, criticizing the world's largest asset manager as being inconsistent in its focus on environmental, social and corporate governance (ESG) issues.
Bluebell, with roughly $250 million in assets, said BlackRock, which invests over $8 trillion, and Fink have "alienated clients and attracted an undesired level of negative publicity" with the firm's ESG strategy.
The criticism from London-based Bluebell is the opposite of recent accusations by some U.S. lawmakers and state officials that BlackRock and Fink are putting sustainability goals before earning returns. According to Bluebell, BlackRock is not going far enough in pursuing its ESG goals and is failing to distance itself from investments in fossil fuel, including coal.
Giuseppe Bivona and Marco Taricco, Bluebell's partners, on Nov. 10 wrote to Fink, who regularly advises world leaders and has taken a high-profile role in advocating for ESG investing, that they want to see someone else in the job.
The hedge fund also wants BlackRock to "initiate a strategic review of (its) stance on ESG" and adopt other governance changes.
Bluebell owns 0.01% of BlackRock, which has a market capitalization of $106.7 billion, a person familiar with the stake said.
Bluebell is known for waging campaigns against prominent companies with very small investments including one at Belgian chemical company Solvay (BR:SOLB) where it wanted the board to address an environmental issue at its Rosignano, Italy, factory.
Bluebell said BlackRock has failed to support its requests.
"In the past 18 months, Bluebell has waged a number of campaigns to promote their climate and governance agenda," a BlackRock spokesman said. "BlackRock Investment Stewardship did not support their campaigns as we did not consider them to be in the best economic interests of our clients."
Bluebell was founded in 2019 and has taken on companies including GlaxoSmithKline (NYSE:GSK), Glencore (OTC:GLNCY), Vivendi (OTC:VIVHY) and Danone, where it engineered the ouster of former CEO Emmanuel Faber.
"Fink clearly has political ambitions because it is not his job as chief executive of BlackRock to dictate energy policy,” Bivona told Reuters in an interview.
Fink's name has often been floated as a possible Cabinet member in Washington and the firm's executives are often consulted by policy makers.
While Bluebell said BlackRock's positions have hurt it with clients, the company reported pulling in $250 billion in net new assets in the first three quarters of 2022.
The Wall Street Journal first reported Bluebell's campaign at BlackRock.
Fink pens an annual letter to CEOs in January and has pushed corporations to see beyond profits.
BlackRock is Bluebell's most high-profile target yet, coming at a time more investors are paying attention to ESG factors.
Last week, Florida's chief financial officer said his department would pull $2 billion worth of its assets managed by BlackRock, the biggest such divestment by a state opposed to the asset manager's ESG policies.