A Rocky Path Between Climate Goals and Appointing Saudi Aramco Head

• • BlackRock faces public scrutiny for its recent environmental record and the appointment of Saudi Aramco’s head to its board, contradicting its stance on climate-friendly policies.
  • Despite initiatives like Net Zero Asset Managers, BlackRock received a C+ grade in InfluenceMap’s Asset Managers & Climate Change Report 2023, raising concerns over the firm’s commitment to eco-friendly practices.

According to the New York Times’ latest report, the world’s largest asset manager, BlackRock, is finding itself embroiled in controversy as critics question its commitment to environmental stewardship. Notably, BlackRock’s CEO Larry Fink announced the retirement of the term ‘ESG’ (Environmental, Social, and Corporate Governance) as he felt it had become too politicized.

A Contradictory Path Towards Sustainability?

With BlackRock waiting for the SEC’s approval for the first Bitcoin ETF in the United States, its environmental record and recent actions are in the spotlight. The firm’s unexpected turn, involving the appointment of Amin Nasser, the head of the oil giant Saudi Aramco, to its board, has raised eyebrows. Saudi Aramco is responsible for over 4% of the world’s greenhouse emissions, a figure that stands in stark contrast to BlackRock’s claims of being a climate-friendly organization.

Subpar Rating on Climate Initiatives

In InfluenceMap’s Asset Managers & Climate Change Report 2023, BlackRock received a C+ grade, a less-than-flattering evaluation. It was part of an industry-wide assessment that showed little progress on climate goals since 2021. The report highlights BlackRock’s failure in effective climate stewardship processes and criticizes the lack of shareholder authority to push companies towards greener practices. This is despite the rise of initiatives like Net Zero Asset Managers, aiming to achieve net zero greenhouse gas emissions by 2050 or before.

The evaluation was in direct contrast to some European asset managers like Legal & General Investment Management, UBS Asset Management, and BNP Paribas Asset Management, who were praised for their robust climate stewardship.

Increased Shares in Fossil Fuel Companies

Further compounding BlackRock’s image problem is the report’s revelation that asset managers globally hold almost three times more shares in fossil fuel companies than in green investments. The industry’s failure to make substantial progress towards common goals, such as net-zero carbon emissions by 2050, adds to the concerns.

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Former Oil CEO’s Appointment – A Tumultuous Time

The criticism comes at a particularly inopportune time for BlackRock, with the recent addition of Amin Nasser, former CEO of the world’s largest oil company, to its board. This has led to accusations of hypocrisy and has placed BlackRock’s climate impact under negative review.

On a separate note, the asset manager has also faced criticism from Republican lawmakers for being too “woke,” leading to decisions by some U.S. states like Florida to withdraw state funds managed by BlackRock.

As BlackRock finds itself caught in a political crossfire, observers are left to wonder about the impact of these developments on its position within the private funds industry, particularly as it seeks a quiet few months to secure its Bitcoin ETF application.

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