Unlock Editorial Digest for Free
FT editor Roula Khalaf chooses her favorite stories in this weekly newsletter.
BlackRock has become the latest financial firm to be bailed out from a major climate change group following the election of Donald Trump as US president and increased regulatory scrutiny.
The world’s largest fund manager told institutional clients in a letter on Thursday that it has withdrawn from Net Zero Asset Managers, a global group that describes itself as committed to “achieving financial assets by 2050 or sooner.” The goal of net-zero greenhouse gas emissions.”
NZAM’s membership “has led to confusion about BlackRock’s practices and has exposed us to legal investigations by a number of public officials,” NZAM deputy chairman Philipp Hildebrand wrote, according to a copy of the letter seen by the Financial Times.
In recent weeks, six of the largest U.S. banks – JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – have all withdrawn from a similar banking organization, the Net Zero Bank Alliance.
Since proposing that “climate risk is investment risk” in 2020, BlackRock has been under continuous attack from conservative politicians in the United States. They have launched lawsuits, regulatory investigations and boycotts, claiming the $11.5 trillion fund manager is using its massive holdings to promote climate activism and other forms of “woke capitalism” against U.S. companies.
Late last year, 11 Republican-led states sued BlackRock, Vanguard Group and State Street Bank, accusing them of conspiring to limit coal supplies and advance a “destructive, politicized environmental agenda.” Federal banks and energy regulators are also investigating whether large fund managers meet regulatory requirements to act as passive investors.
Meanwhile, progressive groups have become increasingly critical of fund managers’ stance that clients’ financial interests must come first unless investors specifically ask that sustainability be prioritized.
BlackRock’s support for shareholder proposals on environmental and social issues has dropped from 47% in 2021 to 4% last year.
BlackRock has sometimes tried to address the issue, in part because it also has a large number of clients in Europe who want faster progress in fighting climate change.
Last year, it took a middle-of-the-road position with another climate group, Climate Action 100+, an investor group that lobbies companies to reduce greenhouse gas emissions. It withdrew from the organization as a global entity, but its smaller international affiliates remained members.
Vanguard quit NZAM more than a year ago, while State Street remains a member. Bond giant Pimco and the asset management arm of Goldman Sachs never joined.
BlackRock said in the letter that breaking away from NZAM “will not change the way we develop products and solutions for clients, nor how we manage their portfolios. BlackRock’s active portfolio managers will continue to assess the impact of climate change on associated significant risks and other investment risks.
