BLACKROCK is parting ways with one of the world’s biggest climate investor groups after being targeted by Republican politicians for its efforts on global warming.
The money manager said on Thursday (Jan 9) in a letter to clients that it decided to leave the Net-Zero Asset Managers initiative. Membership in the group “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials”, the New York-based firm said.
BlackRock, which oversees more than US$11 trillion, has been the subject of attacks from GOP lawmakers for embracing what conservatives call “woke” policies. Most recently, BlackRock was among a group of asset managers singled out in a lawsuit led by Texas, alleging breaches of antitrust laws due to the adoption of pro-climate strategies that suppress coal production.
BlackRock also was mentioned, along with firms including State Street and Vanguard Group, in a report last month from the House Judiciary Committee that said it found “evidence of collusion and anticompetitive behaviour” by the financial industry to “impose radical ESG-goals” on US companies.
“Our participation in NZAMi did not impact the way we managed client portfolios,” BlackRock said in the letter signed by vice-chairman Philipp Hildebrand and Helen Lees-Jones, global head of sustainable and transition solutions. “Therefore, our departure does not change the way we develop products and solutions for clients or how we manage their portfolios.”
BlackRock added that it managed more than US$1 trillion in sustainable and transition investment strategies as recently as September and “our commitment to helping our clients achieve their investment goals remains unwavering”.
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NZAMi is a group of roughly 325 asset managers, overseeing about US$50 trillion, that are committed to achieving net zero alignment by 2050. State Street Global Advisors, the world’s third-biggest asset manager, said on Thursday that it remains a member of NZAMi. Vanguard, the second biggest, left the group in 2022.
Over the past month, an equivalent coalition for lenders, the Net-Zero Banking Alliance (NZBA), has seen a mass exodus of US members. Since early December, NZBA lost Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley and JPMorgan Chase.
The moves reflect Wall Street’s desire to shield itself from increasing political pressure as Donald Trump returns to the White House. Earlier this week, Texas Attorney General Ken Paxton dropped his threat to cut off the lenders from municipal-bond deals after they quit NZBA.
In its statement, BlackRock said its fund managers “continue to assess material climate-related risks, alongside other investment risks, in delivering for clients”. About two-thirds of the firm’s largest clients, including all of its biggest customers in Europe, have made net zero commitments, the money manager said.
BlackRock chief executive officer Larry Fink had been a champion of environmental, social and governance (ESG) strategies, devoting large parts of his annual letters to urging corporate bosses to pay attention to climate change and other societal issues. But then he came under attack from Republicans and some states collectively pulled billions of US dollars from BlackRock.
In response, Fink has said he no longer uses the ESG label because it’s become too politicised.
“BlackRock is under political pressure to exit climate groups and from shareholders who are unhappy with the loss of business from state investment funds that object to the agendas of climate groups,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. BLOOMBERG
