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BlackRock has become the latest financial firm to bail out of a major climate change industry group following the election of Donald Trump as US president and increased regulatory scrutiny.
The world’s largest money manager told institutional clients in a letter on Thursday that it had divested from Net Zero Asset Managers, a global voluntary group that describes itself as committed to “the goal of net zero greenhouse gas emissions by 2050 or earlier”.
Membership of NZAM had “caused confusion about BlackRock’s practices and subjected us to legal questions from various public officials,” vice-chairman Philipp Hildebrand wrote, according to a copy of the first letter from the Financial Times.
The six largest US banks, JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs, have left a similar banking group, the Net-Zero Banking Alliance, in recent weeks.
Since taking a position in 2020 that “climate risk is investment risk”, BlackRock has been repeatedly attacked by conservative US politicians. They have launched lawsuits, regulatory investigations and boycotts, alleging the $11.5 trillion money manager is using its vast holdings to push climate activism and other forms of “smart capitalism” on American companies.
“This withdrawal really just shows that what they said in 2020 and 2021 was just performance and marketing,” said Tracey Lewis, head of climate policy at Public Citizen, a progressive advocacy group. “Today, the truth is coming out as all these companies are trying to appease the incoming administration.”
Late last year, 11 Republican-led states sued BlackRock, Vanguard and State Street, alleging they conspired to limit coal supplies and further 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 become increasingly critical of the money manager’s position that their clients’ financial interests should come first, unless investors have specifically sought to prioritize sustainability.
BlackRock’s support for shareholder proposals on environmental and social issues has fallen from 47 percent in 2021 to 4 percent last year.
BlackRock has sometimes tried to move the needle on the issue, in part because it also has a large group of clients in Europe who want faster progress on addressing climate change.
Last year, it took a middle ground for another climate body, Climate Action 100+, an investor group that lobbies companies to cut greenhouse gas emissions. It left the group as a global entity, but its smaller international arm has remained a member.
Vanguard left NZAM more than a year ago, while State Street remains a member. Bond giant Pimco and Goldman Sachs’ asset management arm never merged.
In the letter, BlackRock said its departure from NZAM “does not change the way we develop products and solutions for clients or the way we manage their portfolios. BlackRock’s active portfolio managers continue to assess material climate-related risks in addition to other investment risks.
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