BlackRock Scrambles to Clarify Stance on Climate-Focused Investing

by Jack McEvoy

 

The world’s largest asset manager, BlackRock, responded to more than a dozen Republican attorneys general explaining its approach to environmental, social and corporate governance (ESG) investing after the attorneys general alleged that the company is violating its fiduciary duties, according to a company letter.

A group of 19 Republican attorneys general sent a letter Aug. 4 to BlackRock in response to BlackRock chief client officer Mark McCombe’s claims that the company does not have a stance on energy investments and merely offers clients a range of investment options in the energy sector. The attorneys general argued that BlackRock used its management of state pension funds to pressure companies to comply with its climate agenda.

BlackRock’s senior managing director Dalia Blass released a response to the attorneys general on Tuesday saying that the asset manager, which manages roughly $8.5 trillion worth of investments, never forced firms to adhere to specific emissions targets and does not coordinate its investment decisions or shareholder voting with climate activist parties, according to a letter.

“While BlackRock participates in a wide variety of organizations on topics of interest to our clients, we have made it clear that we do not coordinate our votes or investment decisions with external groups or organizations,” the letter states.

The Republican attorneys generals expressed skepticism concerning McCombe’s claims that BlackRock remains neutral on the use of fossil fuels and assurances that BlackRock does not place its climate agenda over its duties to its clients. The attorneys general asserted that McCombe’s guarantees are in conflict with BlackRock’s commitment to achieving net-zero emissions by 2050.

“Every company and every industry will be transformed by the transition to a net zero world,” BlackRock CEO Larry Fink stated in a 2022 letter to CEOs. “The question is, will you lead, or will you be led?”

The attorneys general alleged that the firm’s actions “may violate multiple state laws” as BlackRock may be motivated by its climate agenda instead of its official responsibility to make money for its clients. BlackRock’s investment strategy could convert state pension funds into ESG-focused activist portfolios if the SEC’s recently proposed definition of an ESG fund is adopted, which could violate state laws that require a sole focus on financial return for investors, according to the attorneys general.

However, Blass claimed that BlackRock’s ESG investments are “entirely consistent” with its “fiduciary obligations” to clients. Blass also denied the attorneys’ general allegations that BlackRock boycotts energy companies, adding that the company invested “approximately $170 billion” in U.S. energy companies on behalf of its clients.

“BlackRock’s views on the investment risks and opportunities posed by climate change and the low-carbon transition are by no means unique,” her letter states. “In 2020, 92% of the S&P 500 and 70% of the Russell 1000 published sustainability reports.”

BlackRock’s move to clarify its investment strategies and climate agenda comes amid a recent crackdown on ESG investing in Republican-run states. Republican Gov. Ron DeSantis of Florida banned state fund managers from considering ESG standards when managing state funds on Aug. 23.

Texas also declared in August that BlackRock boycotts the fossil fuel industry and moved to remove state pension funds, worth billions of dollars, from the company’s management, according to The Financial Times.

BlackRock did not immediately respond to the Daily Caller News Foundation’s request for comment.

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Jack McEvoy is a reporter at Daily Caller News Foundation.
Photo “BlackRock Building” by Americasroof. CC BY-SA 3.0.

 

 

 


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