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BlackRock has become the latest financial company to make a big bailout from climate change in the wake of the election of Donald Trump as US president and increased regulatory scrutiny.
The world's largest financial manager informed his institutional clients in a letter on Thursday that he is leaving Net Zero Asset Managers, a global group that describes itself as committed to “the goal of reaching net zero greenhouse gas emissions by 2050 or earlier.”
Membership in NZAM “has caused confusion regarding… Black RockOur practices have subjected us to legal inquiries from various government officials,” Vice President Philipp Hildebrand wrote, according to a copy of the letter seen by the Financial Times.
In recent weeks, the six largest US banks – JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – have withdrawn from a similar group of banks, the Net-Zero Banking Alliance.
Since taking a position in 2020 that “climate risk is investment risk,” BlackRock has come under sustained attack from conservative politicians in the United States. They have launched lawsuits, regulatory inquiries and boycotts, alleging that the $11.5 trillion fund manager is using its significant holdings to push climate activism and other forms of “woke capitalism” on corporate America.
Late last year 11 Republican-led states have sued BlackRockand Vanguard and State Street, alleging that they conspired to restrict coal supplies and promote a “destructive and politicized environmental agenda.” Federal banking and energy watchdogs have also launched investigations into whether big money managers meet regulatory requirements to act as passive investors.
At the same time, progressive groups have increasingly criticized a money manager's position that the financial interests of its clients should take precedence unless investors specifically request that sustainability be prioritized.
BlackRock's support for shareholder proposals on Environmental and social issues It decreased from 47 percent in 2021 to 4 percent last year.
BlackRock has at times tried to weigh in on the issue, partly because it also has a large group of clients in Europe who want faster progress on tackling climate change.
Last year, it compromised on another climate body, Climate Action 100+, an investor group that pressures companies to cut greenhouse gas emissions. It has withdrawn from the group as a global entity, but its smaller international arm remains a member.
Vanguard Quit NZAM For more than a year, while State Street remains a member. Bond giant Pimco and Goldman Sachs' asset management arm never joined.
BlackRock said in the letter that its exit from NZAM “does not change the way we develop products and solutions for clients or how they manage their portfolios.” BlackRock's active portfolio managers continue to evaluate material climate-related risks, along with other investment risks.
