BlackRock quits climate change group in latest green climbdown

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BlackRock has become the latest financial firm to bail out of a major climate change industry group in the wake of Donald Trump’s election as US president and heightened regulatory scrutiny.

The world’s biggest money manager told institutional clients in a letter on Thursday that it had left Net Zero Asset Manager, a voluntary global group it described as committed to “the goal of net zero greenhouse gas emissions by 2050 or earlier”.

NZAM’s membership “created confusion about BlackrockIts practices and our subject to legal inquiries from various government officials”, vice-chair Philippe Hildebrandt wrote, according to a copy of the letter seen by the Financial Times.

Six of the largest US banks, JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs, have in recent weeks launched the Net-Zero Banking Alliance, a similar group for banks.

Since publishing a position in 2020 that “climate risk is investment risk”, BlackRock has come under constant attack from US conservative politicians. They have launched lawsuits, regulatory investigations and boycotts, claiming the $11.5tn money manager is using its large holdings to push climate activism and other forms of “weak capitalism” on American companies.

“This withdrawal actually shows that what they said in 2020 and 2021 was just performance and marketing,” said Tracy Lewis, head of climate policy at Public Citizen, a progressive advocacy group. “Today, the truth is coming out because all these companies are trying to please the incoming administration.”

Late last year, 11 Republican-led states sued BlackRockVanguard and State Street, alleging that they conspired to restrict coal supplies and advance a “destructive, politicized environmental agenda.” Federal banking and energy watchdogs have also launched investigations into whether big money managers are meeting regulatory requirements to act as passive investors.

At the same time, progressive groups have increasingly criticized the money manager’s position that its clients’ financial interests must be prioritized unless investors specifically ask for sustainability to be prioritized.

BlackRock’s support for shareholder proposals Environmental and social issues It fell from 47 percent in 2021 to 4 percent last year.

BlackRock has occasionally tried to thread the needle on the issue, as it has a large client base in Europe that wants faster progress on tackling climate change.

Last year, it took a middle ground in another climate organization, Climate Action 100+, an investor group that lobbies companies to reduce greenhouse gas emissions. It has left the group as a global entity, but its smaller international arm remains a member.

Vanguard Exit NZAM More than a year ago, while State Street remains a member. Bond giants Pimco and the asset management arm of Goldman Sachs never joined.

In the letter, BlackRock said its departure from NZAM “does not change the products and solutions we offer to clients or how we manage their portfolios. BlackRock’s active portfolio managers continue to assess material climate-related risks, along with other investment risks.”

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