One of the world’s largest fund managers, BlackRock, which has been proclaiming its high sustainability and ethical values is fighting off a barrage of criticisms that it is in fact one of the worst offenders against the planet.
One of the world’s largest fund managers, BlackRock, has been targeted as the “single largest contributor to climate destruction” by a coalition of US and Australian environmental organisations.
The Sunrise Project, Sierra Club, Friends of the Earth and Amazon Watch kicked off the BlackRock’s Big Problem campaign in New York yesterday to coincide with global leaders gathering for Climate Week in New York.
BlackRock chief executive Larry Fink has made headlines over the past year urging other corporate chiefs to take action on climate change, and use capital in ways that are socially responsible.
But the way it’s investing the $6.3 trillion in funds it has under management belies this stance.
In August this year, the update on its Global Assets Allocation Fund (Aust) said the fund had added to its US midstream/infrastructure companies, “which are less commodity price sensitive than most energy companies, offer a particularly attractive combination of valuation and dividend yields, and stand to benefit from the US becoming the world’s largest hydrocarbon producer.
“We also increased exposure to E&P companies, largely within those companies holding low-cost and large scale US shale assets, as we expect these company share prices to ultimately benefit from the rise in oil prices over the past few months.”
Amazon Watch has also named BlackRock as the single largest US investor in rainforest destruction – the second biggest driver of climate change after fossil fuels.
Perhaps ironically, Mr Fink is on the board of the Nature Conservancy.
“Larry Fink wants to be thought of as a socially responsible corporate leader,” Moira Birss, Amazon Watch spokeswoman said.
“Yet BlackRock refuses to divest from tar sands, coal, Arctic oil, Amazon crude and rainforest destruction, and votes against shareholder demands for climate action and transparency. That is not social responsibility.”
Examination of the BlackRock website by The Fifth Estate showed that it is not easy for a potential investor to scrutinise the fund’s approach to climate change risks and carbon exposure. Neither are mentioned on the sustainability page, nor were carbon exposure risks or climate change risks mentioned in some of the consumer-facing fund information documents or fund updates.
The Fifth Estate contacted BlackRock for comments on its fossil fuel investments and assets, climate change risk disclosure and potential divestment plans.
UPDATE September 28: a spokeswoman for BlackRock contacted The Fifth Estate after publication and said:
BlackRock has invested more in renewable power projects than virtually any other asset manager in the world and also is the largest provider of sustainable ETFs, including the industry’s largest low-carbon ETF. We offer a broad suite of sustainable solutions that allow clients to align their investments with the UN Sustainable Development Goals.Also, the vast majority of the equity holdings we maintain on behalf of our clients are held in index funds that are designed to track the investment results of third-party indices. Third-party index providers determine which companies to include in the indices they create.
As part of the NY campaign launch, activists spoke to staff at BlackRock’s NY headquarters, as well as handing out snack bars with a message and information on the fund’s climate change culpability.
Casey Harrell, the Sunrise Project’s US-based Finance Program spokesman told The Fifth Estate that the activists engaged with around 500 employees.
“Most of the reaction was positive,” he said.
“We debated a few employees – including some senior managers –but so far so good.”
Indypendent reported on the launch, describing it as “killing BlackRock’s fossil fuel investments with kindness”.
Mr Harrell said that working out BlackRock’s fossil fuel investments in Australia in quantitative terms would be “quite an exercise”. It would be “doable” but “laborious”.
However, qualitatively, it is much easier.
BlackRock is “not a small player” in the Australian economy, he said.
“Basically, if a company is publicly traded and thus indexed, BLK is going to own some of it…Its indexed funds span indices across the globe.”
Nine percent of the fund’s global assets under management are invested in Australasia, he said, and the bulk of that is indexed funds.
That amounts to US$600 billion – a greater amount than almost all other Australian-based asset managers, Mr Harrell said.
The Big Problem campaign aims to encourage the asset manager to divest from fossil fuel companies unwilling to change their practices and prioritise fossil fuel-free and deforestation-free funds.
It is also urging it to push companies it owns to align with the Paris Climate Accord and pressure industry laggards through transparent shareholder engagement.
Companies owned by BlackRock possibly include contested oil pipeline projects, following the $3.7 billion acquisition last year of two energy and energy infrastructure funds that include oil and gas pipeline entities.
In addition to the action at the BlackRock HQ, activists engaged with attendees at climate investor events being held during the Climate Week talks.
Lukas Ross, senior policy analyst at Friends of the Earth said that under the current chief executive’s leadership, “BlackRock is a leading investor in fossil fuels and rainforest destruction.”
The campaign is also calling on global asset managers to recognise their power to put the world on a safer climate trajectory.
Collectively, it is estimated they control a combined US$90 trillion in capital.
“BlackRock has an enormous amount of power, and it’s time for them to start using that power for good rather than supporting climate destruction,” Sierra Club campaign representative Ben Cushing said.
“If Larry Fink is serious about his climate legacy, it’s going to take more than good intentions and public statements. He must act now to align BlackRock’s actions with his words and stop funding dirty fossil fuels.”