BlackRock Exits Net Zero Asset Managers Initiative

BlackRock will leave the Net Zero Asset Managers initiative, an investor group committed to achieving net-zero portfolios by 2050 or sooner across all assets under management, a spokesperson for BlackRock confirmed to CIO. The initiative counts more than 325 signatories representing $57.5 trillion in AUM.

BlackRock joined the NZAM initiative in March 2021. In the firm’s 2030 net-zero statement, BlackRock anticipates at least 75% of its client assets under management to be invested in “issuers with science-based targets or equivalent.”

“We are disappointed to see any investor withdraw, but as a voluntary initiative, we respect any individual decisions signatories take,” a spokesperson for the Net Zero Asset Manager initiative said via email. “Climate risk is financial risk. NZAM exists to help investors mitigate these risks and to realize the benefits of the economic transition to net zero.”

The exit comes as similar climate investing groups have seen scores of members leave. The Net-Zero Banking Alliance has seen nearly all major U.S. banks, including JPMorganChase, Bank of America, Morgan Stanley and Goldman Sachs leave the initiative.

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The Climate Action 100+ investor network had also had dozens of high-profile departures, including State Street, J.P. Morgan Asset Management, PIMCO, Franklin Templeton, Nuveen and Goldman Sachs Asset Management, among others.

A pushback against environmental, social and governance-based investing and principles is likely to blame for the exodus. Opponents of ESG investing, including many Republicans in Congress and state-elected officials, say the focus of investment managers should be to maximize returns on their investments and that such ESG targets are not aligned with fiduciary duty to their clients.

This view has led to a number of states banning their public funds from making ESG investments. In December, the Ohio Legislature banned pension fund and university endowments in the state from making “investment decisions with the primary purpose of influencing any social or environmental policy or attempting to influence the governance of any corporation.” The legislation also bans funds from engaging in shareholder activism.

BlackRock has been a frequent target by Republican politicians over what the politicians say is an overcommitment to ESG. A number of states have divested from BlackRock over these concerns, including Texas and the Texas Permanent School Fund, which divested $8.5 billion in assets from the firm.

In December, 11 states filed a complaint against BlackRock, State Street and Vanguard, accusing the trio of conspiring to suppress the coal market through their significant ownership of coal stocks. That complaint also cited the three firms being signatories to the NZAM initiative and accused the trio of pursuing ESG strategies in non-ESG funds.

Last month, BlackRock was terminated as a nearly $1 billion fixed-income manager by the $46 billion Indiana Public Retirement System; under Indiana law, state pension funds cannot invest in managers or service providers determined to have made an ESG commitment. BlackRock’s status as a signatory to the NZAM initiative was cited by Indiana State Treasurer Dan Elliott as such a commitment.

“NZAM has successfully helped raise the level of ambition across investors globally and supported their progress as they have sought to navigate their own individual paths toward a decarbonizing economy in line with their long-term financial objectives and fiduciary duties,” the NZAM spokesperson said. “We look forward to continuing to play this constructive role.”