A report from the Institute for Energy Economics and Financial Analysis (IEEFA) sowed destructive claims of failure and hypocrisy towards BlackRock and its fossil fuel investments, citing that the investor had amalgamated $90 billion in losses over the past 10 years due to misguided investments in the industry.
The Institute summarized the investors’ losses in the below table. It cited that despite recent assertions that BlackRock is serious about climate change considerations and will act with its portfolio, “the firm has become the world’s largest passive investor in fossil fuels.”
“BlackRock has enormous capacity to be the world leader in transitioning the energy sector to renewable and alternative technologies on behalf of investors,” the institute said. “Instead, BlackRock is failing to invest in support of the Paris Agreement targets. With less than 1% in ESG dedicated funds, BlackRock is misrepresenting both its ESG products, and its well-publicised intent to address climate risk.”.
A spokesperson for BlackRock said in response to the report, “the large majority of our equity holdings—including those cited in this report—are held through index-based ETFs and other index products, which track the investment results of third-party indices. Index managers such as BlackRock seek to replicate the performance of the index and do not select or exclude one company over the other based on our views of a company. Index providers determine which companies to include in the indices they create based on the index methodology.
“The conclusions of this report are thus misplaced,” the spokesperson added. “We offer clients various product choices, including portfolios with a focus on ESG factors. These portfolios are among our fastest-growing, which reflects clients choosing to move in that direction.”
The firm orchestrated concerted efforts into renewable energy investments over the past few years, having raised four funds dedicated to the industry with an aggregate capital raise of approximately $4.4 billion.
The IEEFA maintained the firm needs to ultimately apply consistent standards on environmental, social and governance (ESG) products, as well as implement fiduciary duties to investors with transparent, timely, and results-oriented engagement.
BlackRock’s total assets under management recently surpassed $6.5 trillion, cementing its lead as the world’s largest asset manager.
The board of the Seattle City Employees’ Retirement System (SCERS) recently removed BlackRock from its watchlist, saying the firm has made changes to address its proxy voting and how it engages with corporations on their ESG records.