BlackRock can’t seem to catch a break. In recent days, the world’s largest asset manager has faced criticism for its record on the environment. A strange turn of events if you’ve been watching BlackRock’s socially conscious public stance over the past few years. The fear, uncertainty, and doubt (FUD) are not going away.
BlackRock is currently waiting for the SEC to approve its application for the first spot Bitcoin ETF in the United States. So anything that puts the asset manager in a bad light is cause for concern. Worse still, this report goes against BlackRock’s PR about being a climate-friendly organization.
BlackRock Criticized as It Drops the Term ‘ESG’
The financial giant received a less-than-complimentary C+ grade in InfluenceMap’s Asset Managers & Climate Change Report 2023. According to this study of the top 45 major asset managers, released on August 1, the industry has made little progress on climate goals since 2021.
That’s despite the rise of initiatives like Net Zero Asset Managers (NZAM). The NZAM initiative involves industry professionals who work towards the goal of achieving net zero greenhouse gas emissions by 2050 or before.
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This may come as a shock to those familiar with BlackRock’s pivot to environmental, social, and corporate governance (ESG) standards in recent years. The firm’s boss, Larry Fink, has been at the forefront of its adoption of socially conscious capitalism.
However, Fink told the Aspen Ideas Festival on June 25 that he has retired the term ESG as it has become too politicized. Observers will no doubt wonder whether they’ve scrapped the principles behind it, too.
A Poor Grade on Environmental Stewardship
InfluenceMap’s study assessed the managers’ equity portfolios, stewardship, and sustainable finance policy engagement activities.
Its conclusion was not a flattering one for BlackRock and the three other big US asset managers, Vanguard, Fidelity Investments, and State Street Global Advisors. All of them received a Stewardship Score of C+ or lower.
InfluenceMap justified this sorry score with a nod to their “lack of effective climate stewardship processes.” The report also criticized the lack of shareholder authority to make companies transition to greener practices.
This compared negatively to asset managers in Europe, whom the report praised.
“The most robust climate stewardship continues to come from European managers Legal & General Investment Management, UBS Asset Management, and BNP Paribas Asset Management, as well as Federated Hermes. All show clear evidence of engagement with companies on the transition of business models and are active members of Climate Action 100+ (CA100+).”
According to the report, asset managers globally hold almost three times more shares in fossil fuel companies than in green investments. The industry has also not made enough progress towards common goals like achieving net-zero carbon emissions by 2050, it said.
The document also criticized asset managers for not using their policy influence to affect change. This is despite highlighting the risks of climate change and sustainability in their public messaging.
Former Oil CEO Joins the Company’s Board
Talk about unpropitious timing. The negative review of BlackRock’s climate impact comes after a top-level hire from . . . a leading oil firm!
BlackRock was recently criticized for hypocrisy for adding Saudi Aramco head, Amin Nasser, to its board. Nasser’s former firm is the largest oil company in the world, with a market capitalization of $2.084 trillion.
Saudi Aramco is also estimated to be the world’s largest single emitter of greenhouse gases, responsible for over 4% of the world’s greenhouse emissions since 1965.
On the other hand, Republican lawmakers have criticized BlackRock for quite different reasons, claiming the company has become too “woke.” For this reason, some US states, including Florida, have announced their decision to withdraw state funds managed by BlackRock.
As the asset manager becomes a political hot potato, observers may question whether this poses a threat to BlackRock’s position within the private funds industry. For those watching its Bitcoin ETF application, a quiet few months from BlackRock will be most welcome.
BeInCrypto contacted BlackRock for this story, but the firm declined to comment on the record.
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