BlackRock CEO Larry Fink is abandoning the ESG investing push he famously championed for more than a decade for two pragmatic reasons, The Economist reports in “The Demonisation of BlackRock’s Larry Fink.”

For one, the increasingly vociferous attacks on Fink began to get under his skin. As a Bitcoin conference in Miami late last year, venture capitalist Peter Thiel lambasted Fink, saying, “ESG is just a hate factory.”

Even the liberal Economist admits in the article, “A lot of ESG is flim flam. The theory behind it suggests that you can measure companies’ performance on metrics other than financial returns—though the scoring systems are subjective, inconsistent and often set goals that conflict with each other.”

The more significant reason why Fink is dropping his ESG crusade, however, is profits. As BlackRock’s ESG assets ballooned from $4 billion, or 4.4% of the world’s sustainable assets, in 2018 to $60 billion, or one-fifth of the market, in 2022, its institutional clients, especially state treasurers and governors overseeing multi-billion-dollar pension funds, began to take notice.

In December, Florida became the sixth state to threaten to pull billions from BlackRock, $2 billion in its case, over concerns BlackRock was putting social and political interests ahead of its fiduciary duties. Other states have blacklisted BlackRock from managing their pension funds.

“Call it defunding the climate police,” as the magazine puts it.

Earlier this month, House Judiciary Chairman Jim Jordan and two other congressmen fired off letters to BlackRock, Vanguard Group and State Street warning that their ESG mandates could violate U.S. antitrust law.

The congressmen accused the investment firms of colluding on “decarbonizing” all of their assets under management.

Further, Republican lawmakers in 37 states have proposed 167 laws targeting ESG.

Less than 3% of BlackRock’s $9.4 trillion of assets under management are in environmental, social and governance investments, but the world’s biggest asset manager doesn’t like the idea of losing money. Nor does Fink, who thrives on continued growth of the firm.

People in his orbit have gone so far as to say Fink knows he became too zealous about ESG—even that he realizes he was wrong and that the ESG fad is fading.

Tarig Fancy, former chief investment officer for sustainability at BlackRock, says that when Fink made BlackRock into a sustainability champion, he did so with the bottom line firmly in mind.

Robert Kapito, BlackRock president and a partner of Fink’s for 40 years, says, “Larry has an incredible nose for the trends that are coming down in the industry.”

That applies just as equally to trends on their way out, ESG among them.

Internally at BlackRock, many disapproved of Fink’s increasingly strident and political position on ESG. None were comfortable voicing their reservations to the boss.

At least one CEO of one of BlackRock’s investments had the courage to speak up: Charlie Munger, Warren Buffett’s business partner at Berkshire Hathaway, who simply said, “I think the world of Larry Fink—but I’m not sure I want him to be my emperor.”