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Black RockThe world's largest asset manager recently disaffiliated with the Net Zero Asset Managers (NZAM) initiative, a coalition committed to achieving net zero greenhouse gas emissions by 2050.
The company reportedly wrote in a letter to customers last week that membership has caused confusion about BlackRock's operations and exposed us to legal inquiries from various government officials.
BlackRock withdrew from its Net Zero climate commitment. (Yang Meiqing/VCG via Getty Images)
BlackRock also said it was “active.” Investment Portfolio managers “will continue to assess climate-related risks.”
NZAM subsequently ceased all activities and noted that it had begun “a review of the initiative to ensure that NZAM remains fit for purpose in the new global context”.
NZAM will also remove the Statement of Commitment and the list of NZAM signatories, as well as their associated objectives and case studies, from its website pending the outcome of the review, the company said in a statement.
Will Heald, executive director of the nonprofit Consumer Research, told Fox Business that the move follows a major lawsuit involving the asset management firm.
In Spence v. American Airlines, Inc. A federal court It found that American Airlines and certain employees had violated their legal responsibilities under the Employee Retirement Income Security Act (ERISA). The breach involved offering funds managed by BlackRock, such as the S&P 500, Russell 1000 and Russell 3000 index funds, in the company's 401(k) plans. Heald said the ruling raises concerns that other businesses offering similar funds could face similar legal challenges.
“We always act independently and with a singular focus on what is in the financial best interest of our clients,” a BlackRock spokesperson told Fox Business about the case. Our only agenda is to maximize returns for our clients, consistent with their choices.
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Larry Fink, chairman and chief executive officer of BlackRock Inc., is shown here. BlackRock has withdrawn from the NetZero initiative. (Victor J. Blue/Bloomberg via Getty Images/Getty Images)
In a letter first obtained by Fox Business warning every Fortune 500 company about the potential risks associated with BlackRock, Heald wrote: “Although BlackRock pulled out of one of its net zero alliances last week, the company “Exit is done,” he proudly announced. Change the way… we manage (clients') portfolios.' And BlackRock maintains its membership in the United Nations PRI, where it has committed to “incorporating ESG issues into (its) ownership policies and practices.”
Heald's letter continued, “Thus, fiduciaries risk a breach of their duties by continuing to entrust plan assets to BlackRock. As a result, any firm or corporation that uses BlackRock to administer its retirement plans is now “Effectively aware that Blackrock has acted with a dual motivation in the past and is still publicly committed to doing the same moving forward.”
“Net zero” commitments were expanded after the 2021 UN climate conference. Conservative lawmakers generally oppose these policies, arguing that they are based on questionable data and could harm economic growth, especially in energy-producing countries. They are often critical of policies such as 'crooked capitalism', which they claim can lead to higher energy costs, job losses in traditional energy sectors and unnecessary government intervention.
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BlackRock headquarters in New York, United States, on Wednesday, December 27, 2023. (Angus Mordant/Bloomberg via Getty Images/Getty Images)
Held told Fox Business he believes President-elect Donald Trump The victory shows that many voters are in favor of rolling back some of these left-wing initiatives.
“I care about shareholders, but I care more about consumers,” Heald said. “And the problem is that all this “Net Zero” stuff. It increases costs that must then be passed on to the consumer. It's about rising costs everywhere, from the gas station to the grocery store, and a significant contribution to inflation.
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An NZAM spokesperson told Fox Business in a statement that BlackRock's withdrawal was “disappointing” and that “climate risk is a financial risk.”
“NZAM exists to help investors mitigate these risks and realize the benefits of the economic transition to net zero,” the statement said.