BlackRock has hit back at Republican politicians for what it calls their “misconceptions” about its approach to climate change, arguing that its efforts are “entirely consistent” with a duty to maximise investor returns.
The world’s largest money manager has been under concerted attack for its use of environmental, social and governance factors in investing. It has become a target because chief executive Larry Fink has been outspoken about the need to address global warming.
Nineteen state attorneys-general, all of them Republicans, sent a letter to BlackRock last month accusing it of prioritising “activism” over fiduciary duty to their state pension funds.
“Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda,” they wrote in the letter, which was led by Arizona attorney-general Mark Brnovich.
New York-based BlackRock responded on Wednesday.
“Climate change is testing the resilience of many industries and businesses. As prudent risk managers and stewards of our clients’ assets, it is imperative that we seek to understand and assess how these risks and opportunities will impact the companies in which we invest,” the company wrote to the attorneys-general.
BlackRock, with $8.5tn in assets under management, was also the lone US company on a list of money managers singled out last month for potential divestment by the Texas comptroller because they allegedly “boycott” the fossil fuel industry. Several other states are considering similar moves.
The money manager denied boycotting fossil fuel, arguing that its $170bn of investments in US energy companies are “completely at odds with any notion of a boycott”.
It argued that its main goal when it comes to climate change is “transparency . . . We ask companies to provide disclosures on material issues that impact their businesses so that investors can make informed decisions.”
When voting against management in shareholder resolutions, BlackRock wrote, “Our votes are not cast to ‘penalise’ companies. Quite the opposite: our votes are cast with a view to achieving the best long-term value for those companies and their shareholders.”
The asset manager has also received criticism from environmental activists this year for pulling back on its support for US shareholder proposals on environmental and social issues. Saying the proposals had become too prescriptive, BlackRock voted in favour of them just 24 per cent of the time, down from 43 per cent last year.
BlackRock also rolled out a “Voting Choice” programme that allows institutional money managers, including state pension funds, to choose how to vote their own shares at annual general meetings.
“We do not . . . dictate to companies what specific emission targets they should meet or what type of political lobbying they should pursue,” BlackRock wrote to the attorneys-general.
Brnovich’s office did not immediately respond to a request for comment.
Climate Capital
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here
Comments are closed, but trackbacks and pingbacks are open.