BlackRock’s hasty backflip on climate commitments, prompted by shifting political winds, exposes the fragility of corporate promises. When even global giants retreat at the first sign of opposition, true climate leadership is left to the brave – like Patagonia – not the world’s biggest asset manager.
In news to hand on Thursday, New York City may already be flying its new progressive colours following the landslide win by Democrat Zohran Mamdani as mayor elect.
The city’s comptroller Brad Lander has urged city pension funds to dump BlackRock, “the world’s biggest asset manager” because it’s “unable” to meet several of the city pension system’s climate expectations.
That’s potentially a loss of $64.28 billion ($US42 billion) in mandates. Even at the scale this global behemoth operates at, around $US13.5 trillion, this must hurt. If not so much from the financial loss as the slap in the face from the world’s natural home of global capitalism.
The move comes after the asset manager made an almost immediate retreat on its previous stance of urging climate positive investment among its clients and customers, as soon as Donald Trump started on the ascendant.
This, after fiercely advocating that investors become climate active.
Boss Larry Fink, in his traditional annual “letter” distributed at the start of the year to the world’s financial heavyweights, has been unequivocal in recent years in advocating for climate action.
We’ve even sung his praises here.
But how the worm turns.
As soon as the mood flickered in the political world Fink, despite all the power in his hands, made an about face.
It didn’t help that Texas in 2022 blacklisted several asset managers, including BlackRock, for what it called a fossil fuel “boycott”, the FT reports.
As New York City’s Brad Lander told The Financial Times, “Larry Fink has said out loud climate risk is financial risk.”
“Whether [BlackRock is] scared of the Trump administration or looking for an excuse, what I do know is climate risk is financial risk.?and we need asset managers who attend to the long-term risks in our portfolio.”
His letter this year focused on a kind of white-label exhortation to build wealth, then meandered into a The Rest is History style dissertation on the capital markets’ origin story and the benefits they’ve brought humanity.
In one section of the feature-length “letter” this year Fink sings the praises of investors:
I’ve always said investing is an act of hope – that no one invests for the long term unless they believe the future will be better than the present. But that’s not quite right. Investing isn’t just an act of hope; investing is what makes our hopes, our reality.
Of course, we agree that wealth can make our hopes a reality.
But what sort of reality?
Using Fink’s logic, if we continue to invest in fossil fuels and other planet-destroying enterprises, then the reality we are carving out is that one that’s destroying us. Business as usual.
As we head past 1.5 degrees of warming, that’s not a reality we need.
Sorry, Larry, you need to revisit your ethics. Or even recent past.
Patagonia on failure and owning it
Meanwhile at the other end of the ethics spectrum Patagonia, the famed outdoor clothing outfit, much-loved by sustainability folk, shocked the social media sphere this week with revelations that it was failing miserably to become sustainable.
To be clear, no one outed this company; it’s self-revelations and self-reporting that we’re talking about.
It was Patagonia that shocked on the environmental and social sustainability upside only a few years ago when it said it was going to become fully sustainable and even take back second hand clothing for sale, which incidentally earned the company $13 million.
Even more stunning was when the founding family gave the entire company away in 2022, when it was worth about $4.6 billion ($US3 billion).
It had to pay $26 million ($US17) million in taxes for the privilege, because much of the funds were going into a trust.
But none of this good will seems to have had much impact on sustainability performance.
In an what must be a first for big corporates, its report this week could be mistaken for self-flagellation on a grand scale.
“Nothing we do is sustainable,” founder YvonChouinard said.
Chief executive Ryan Gellert said, “Our charter mandates we follow social and environmentally responsible practices, yet every product we make takes irreplaceable resources from the planet. Our existence seems counter to our purpose.”
The company has now ditched its carbon neutral targets, which encouraged offsets for true net zero emissions.
But it still has targets for improvement. Such as near term ambitions include reducing absolute scopes 1 and 2 emissions by 80 per cent by fiscal year 2030 and reducing scope 3 emissions by 55 per cent from the FY17 base year.
Some of the social media comments are worth a mention.
Such as:
Patagonia has encouraged a space for the rest of us to admit we don’t have it figured out either. This report felt like an invitation to have open conversations about progress being messy.”
And then this:
Maybe the most radical thing Patagonia could do next is question the one thing they never touch: Why keep producing so much in the first place?”