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BlackRock has become the latest financial firm to bail out of a major climate change group following the election of Donald Trump as US president and a high-profile administration review.
The world's largest fund manager told institutional clients in a letter on Thursday that it has abandoned Net Zero Asset Managers, a global voluntary group that says it is committed to “the goal of net zero greenhouse gas emissions by 2050 or sooner”.
Membership in NZAM “caused confusion about BlackRock“To do this and subject us to legal questions from various public officials”, vice-chairman Philipp Hildebrand wrote, according to a copy of the letter seen by the Financial Times.
All six major US banks, JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs, have left the same group in banks, the Net-Zero Banking Alliance, in recent weeks.
Since he posted the position in 2020 that “climate risk is an investment risk”, BlackRock has been under constant attack from American politicians. They have launched lawsuits, regulatory and construction inquiries, claiming that the 11.5tn fund manager is using his big money to push climate activism and other forms of “awakened capitalism” in American companies.
“This pullout just shows what they said in 2020 and 2021 was just a make and sell,” said Tracey Lewis, head of climate policy at Public Citizen, a progressive advocacy group. “Today, the truth is coming out as all these companies are trying to apologize to the incoming administration.”
At the end of last year, 11 Republican-led states sued BlackRockVanguard and State Street, alleging that they conspired to disrupt coal supply and advance a “destructive, political agenda”. Federal banks and energy watchdogs have launched questions about whether big money managers meet regulatory requirements to act as passive investors.
At the same time, progressive groups have grown increasingly critical of the money manager's position that clients' financial interests should be prioritized unless investors specifically ask for stability to be prioritized.
BlackRock's support for shareholder proposals on environmental and social issues down from 47 percent in 2021 to 4 percent last year.
BlackRock has sometimes tried to thread the needle on this issue, because it also has a large group of clients in Europe who want faster progress in dealing with climate change.
Last year, it took center stage from another climate body, Climate Action 100+, an investor group that encourages companies to reduce greenhouse gas emissions. It has left the group as a global body, but its small international arm has remained a member.
Vanguard stop TRYING more than a year ago, while State Street remains a member. Bond giant Pimco and the asset management arm of Goldman Sachs have never met.
In the letter, BlackRock said his departure from NZAM “does not change the way we develop products and solutions for clients or the way we manage their portfolios.” BlackRock's active portfolio managers continue to assess climate-related risks, as well as other investment risks.
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