- BlackRock’s environmental track record faces scrutiny as a report by InfluenceMap scores it poorly on climate stewardship.
- The recent appointment of Saudi Aramco’s former head to BlackRock’s board of directors intensifies criticism, highlighting the company’s complex position between ESG commitments and strategic appointments.
BlackRock, the world’s largest asset manager, finds itself under fire as its climate impact record comes under public scrutiny. Despite championing Environmental, Social, and Governance (ESG) standards in the past, a recent study by InfluenceMap casts a shadow over BlackRock’s environmental stewardship, further complicated by the company’s controversial appointment of the ex-head of Saudi Aramco to its board.
InfluenceMap’s Climate Report Raises Questions
InfluenceMap’s recent “Asset Managers & Climate Change Report 2023” has awarded BlackRock a less-than-flattering C+ grade, a result that may surprise those familiar with BlackRock’s strong public stance on ESG standards in the past. The report, which evaluated the top 45 major asset managers, indicated that the industry had made negligible progress on climate goals since 2021, despite the emergence of initiatives like Net Zero Asset Managers (NZAM).
The NZAM initiative brings together industry professionals committed to achieving net-zero greenhouse gas emissions by 2050 or sooner. BlackRock’s leadership, particularly CEO Larry Fink, had been notable proponents of such initiatives. However, Fink recently declared that he has abandoned the term ‘ESG’, citing its overly politicized nature. This move has led to speculation about BlackRock’s continued commitment to the principles behind ESG.
A Troubling Stewardship Score
According to InfluenceMap, the financial behemoth and three other major US asset managers, Vanguard, Fidelity Investments, and State Street Global Advisors, all received a Stewardship Score of C+ or lower. This score suggests inadequate climate stewardship processes and criticizes their limited shareholder authority to green-transition companies.
The study highlights a stark contrast with European asset managers, who received praise for their robust climate stewardship. Meanwhile, the global asset management industry as a whole was criticized for holding nearly three times as many shares in fossil fuel companies compared to green investments, revealing a significant gap in progress towards net-zero carbon emissions by 2050.
The Saudi Aramco Controversy
Adding fuel to the fire, BlackRock’s climate impact review coincides with the appointment of Saudi Aramco’s ex-head, Amin Nasser, to its board. With a market capitalization of $2.084 trillion, Saudi Aramco is not only the world’s largest oil company but also considered the largest single emitter of greenhouse gases. This appointment sparked accusations of hypocrisy against BlackRock, complicating its stance on ESG standards.
On a different front, Republican lawmakers have criticized BlackRock for leaning too far into “wokeness”, leading to some US states, such as Florida, deciding to withdraw state funds managed by BlackRock.
With all eyes on BlackRock’s pending application for the first Bitcoin ETF in the United States, the unfolding controversy presents a challenge to the asset manager’s reputation. As BlackRock navigates this rocky path between ESG commitments and strategic appointments, the ripple effects of its decisions are being closely watched by the industry.
