BlackRock pulls out of climate change group in latest green retreat

Open Editor’s Digest for free

Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.

BlackRock has become the latest financial firm to bail out a wide range of industries concerned with 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 volunteer 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the six largest US banks – JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – have withdrawn from a similar group of banks, the Net-Zero Banking Alliance.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 large holdings to push climate activism and other forms of “woke capitalism” on corporate America.

“This withdrawal actually shows that what they said in 2020 and 2021 was just performance and marketing,” said Tracey Lewis, climate policy chief at Public Citizen, a progressive advocacy group. “Today, the truth is emerging as all these companies try to appease the incoming administration.”

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 Terminate 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.

Climate capital

Where climate change meets business, markets and politics. Explore FT’s coverage here.

Interested in learning about FT’s commitments to environmental sustainability? Learn more about our science-based goals here