BlackRock, the world’s largest asset manager, recently withdrew from its membership with Net Zero Asset Managers initiative (NZAM), a coalition committed to achieving net-zero greenhouse gas emissions by 2050.
The firm last week wrote in a letter to clients that the membership had “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials,” according to reports.
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BlackRock also reportedly said its “active” investment portfolio managers will “continue to assess material climate-related risks.”
NZAM subsequently paused all activities and noted that it launched “a review of the initiative to ensure NZAM remains fit for purpose in the new global context.”
“NZAM will also remove the commitment statement and list of NZAM signatories from its website, as well as their targets and related case studies, pending the outcome of the review,” the company said in a news release.
Will Hild, the executive director of the nonprofit Consumers’ Research, told Fox Business the move comes on the heels of a major lawsuit involving the asset management company.
In Spence v. American Airlines, Inc., a federal court found that American Airlines and some employees violated their legal responsibilities under the Employee Retirement Income Security Act (ERISA). The violation involved offering BlackRock-managed funds, such as S&P 500, Russell 1000, and Russell 3000 index funds, in the company’s 401(k) plans. Hild said the ruling raises concerns that other businesses offering similar funds might face similar legal challenges.
“We always act independently and with a singular focus on what is in the best financial interests of our clients,” a BlackRock spokesperson told Fox Business regarding the case. “Our only agenda is maximizing returns for our clients, consistent with their choices.”
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In a letter first obtained by Fox Business that was sent to every Fortune 500 company warning about alleged risks associated with BlackRock, Hild wrote: “Although BlackRock exited one of its net zero alliances last week, the firm proudly proclaimed that the ‘departure doesn’t change the way… we manage [clients’] portfolios.’ And BlackRock maintains its membership in UN PRI where it has pledged to ‘incorporate ESG issues into [its] ownership policies and practices.’”
Hild’s letter continued: “Fiduciaries, therefore, risk violating their duties by continuing to entrust plan assets to BlackRock. In conclusion, any corporation or company using BlackRock to manage their pension plans is now effectively aware that BlackRock has acted with a dual motive in the past and is still publicly committed to doing the same moving forward.”
“Net Zero” commitments became widespread after a United Nations climate conference in 2021. Conservative lawmakers generally oppose these policies, arguing that they’re based on dubious data and could harm economic growth, particularly in energy-producing states. They often criticize such policies as “woke capitalism,” claiming they could lead to higher energy costs, job losses in traditional energy sectors and unnecessary government intervention.
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Hild told Fox Business he believes President-elect Donald Trump’s win shows that many voters are in favor of rolling some of these leftwing initiatives back.
“I care about shareholders, but I care more about consumers,” Hild said. “And the problem is, all this ‘Net Zero’ stuff raises costs that then have to be passed along to the consumer. It’s about raising costs everywhere, from the gas pump to the grocery store, and significant contributor to inflation.”
A NZAM spokesperson told Fox Business in a statement that BlackRock’s withdrawal was “disappointing” and that “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 statement read.
