Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
BlackRock has become the latest financial company to bail out from a major climate group in the wake of Donald Trump’s election as US president and increased regulatory scrutiny.
Net Zero Asset Managers, a global group that describes itself as committed to a “net-zero greenhouse gas emissions goal of 2050 or sooner,” the world’s largest asset manager said in a letter to institutional investors on Thursday. announced that he had withdrawn from the group.
A copy of the letter obtained by the Financial Times said NZAM’s membership “has caused confusion regarding BlackRock’s practices and has led to legal inquiries from various public officials,” according to deputy chairman Philip Hildebrand. is writing.
In recent weeks, six major U.S. banks – JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – have joined forces with a similar banking group, the Net Zero Banking Alliance. Withdrew from.
BlackRock has come under sustained attack from conservative U.S. politicians since asserting its position in 2020 that “climate risk is an investment risk.” They have launched lawsuits, regulatory investigations, boycotts, and $11.5 trillion asset managers have used their vast holdings to incentivize climate change activism and other forms of “woke capitalism” against American companies. He claimed that he was forcing himself on him.
Late last year, 11 Republican-led states sued BlackRock, Vanguard, and State Street, accusing them of conspiring to suppress coal supplies and promote a “destructive and politicized environmental cause.” The federal banking and energy watchdog has also launched an investigation into whether large asset managers meet regulatory requirements to act as passive investors.
At the same time, progressive groups have increasingly criticized asset managers’ position that they must prioritize the financial interests of their clients unless investors specifically ask them to prioritize sustainability. There is.
BlackRock’s approval rating for shareholder proposals on environmental and social issues fell from 47% in 2021 to 4% last year.
BlackRock has tried to address the issue from time to time, in part because it has a large group of European clients who want to move faster to tackle climate change.
Last year, it reached a compromise with another climate group, Climate Action 100+, an investor group that pushes companies to reduce greenhouse gas emissions. The company left the group as a global company, but a small international division remained as a member.
Vanguard left NZAM over a year ago, but State Street remains a member. Bond giant Pimco and Goldman Sachs’ asset management division never teamed up.
BlackRock said in the letter that its departure from NZAM “will not change the way we develop products and solutions for our customers or manage their portfolios.” BlackRock’s active portfolio managers continue to assess material climate-related risks alongside other investment risks. ”