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BlackRock has become the latest financial firm to bail out of a major climate change group following the election of Donald Trump as US president and heightened regulatory scrutiny.
The world’s biggest money manager told institutional clients in a letter on Thursday that it has exited Net Zero Asset Managers, a global group that describes itself as committed to “the goal of net zero greenhouse gas emissions by 2050 or earlier.”
NZAM membership “caused confusion about the relationship BlackRockpractices and subjected us to legal questioning of various public officials,” Vice President Philipp Hildebrand wrote, according to a copy of the letter seen by the Financial Times.
The six largest US banks, JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs, have all pulled out of a similar group of banks, the Net-Zero Banking Alliance, in recent weeks.
Since taking the position in 2020 that “climate risk is an investment risk”, BlackRock has come under constant attack from American conservative politicians. They have launched lawsuits, regulatory investigations and boycotts, arguing that the $11.5 trillion money manager is using his vast holdings to push climate activism and other forms of “awakened capitalism” on American companies.
At the end of last year, 11 Republican-led states sued BlackRockVanguard and State Street, alleging that they conspired to limit coal supplies and advance a “destructive, politicized environmental agenda.” Federal banking and energy watchdogs have also launched investigations into whether big money managers are meeting regulatory requirements to act as passive investors.
At the same time, progressive groups have become increasingly critical of a money manager’s view that the financial interests of its clients must come first unless investors specifically demand that sustainability be prioritized.
BlackRock’s support for shareholder proposals on environmental and social issues it fell from 47 percent in 2021 to 4 percent last year.
BlackRock has tried to thread the needle on this issue from time to time, in part because it also has a large group of clients in Europe who want faster progress on tackling climate change.
Last year, it took a middle ground with another climate body, the Climate Action 100+, an investor group that lobbies companies to reduce greenhouse gas emissions. He left the group as a global entity, but its smaller international arm remained a member.
Vanguard leave NZAM more than a year ago, while State Street remains a member. Bond giant Pimco and the asset management division of Goldman Sachs never joined.
In the letter, BlackRock said its departure from NZAM “does not change the way we develop products and solutions for clients or how we manage their portfolios. BlackRock’s active portfolio managers continue to assess material climate-related risks, along with other investment risks.”
