Letter sent during Climate Week calls for BlackRock to better align their actions with their climate commitments, and their recognition that climate risk is financial risk.
Today, New York City Comptroller Brad Lander shared a letter to BlackRock, Inc. Chief Executive Officer Larry Fink to express growing concern that BlackRock’s investment actions do not align with its climate commitments, and to request immediate action by BlackRock to address these contradictions. The letter follows BlackRock’s response to the Attorneys General from Arizona, Nebraska, Kentucky, and 16 other states regarding the criticism of their ESG (environmental, social, and governance) policies.
BlackRock is the largest asset manager in the world, and the largest for three of the New York City pension funds (Teachers’ Retirement System, New York City Employees’ Retirement System and the Board of Education Retirement System), managing approximately $43 billion of their investments.
The three Systems have set a goal to reach net zero portfolios by 2040 and have taken significant steps to reach that goal. The letter states that the three NYC Funds climate commitments can only be met with the active support of their asset managers, starting with BlackRock.
In the letter, Comptroller Lander writes, “If we do not find a way to dramatically reduce carbon emissions in alignment with the Paris Agreement, the harm will not only be measured in lives lost and people displaced; it will also be measured in trillions of dollars lost in our collective portfolios.”
The letter requests swift action from BlackRock, and asks the company to:
- Publish an implementation plan that makes clear BlackRock’s commitment to achieving net zero greenhouse gas emissions across its entire portfolio, with concrete steps that detail how it intends to reach science-based targets on a specific timeframe, and clear mechanisms to regularly report on Scopes 1, 2, and 3 emissions for all assets in BlackRock’s portfolio.
- Provide a detailed approach to keeping fossil fuel reserves in the ground and phasing out high-emitting assets.
- Support climate action through transparent corporate engagement that requires disclosure of climate-related lobbying, works to end lending and insurance for new fossil fuel supply projects, and pushes for science-based targets at portfolio companies.
Selected text of the letter is below. To read the letter in full, please click here.
“BlackRock has repeatedly and rightly recognized climate change as an investment risk. In your 2020 letter to CEOs, you name climate change as a “defining factor in companies’ long-term prospects,” and declared your “investment conviction that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors.” Your 2021 letter to CEOs committed to “supporting the goal of net zero greenhouse gas emissions by 2050 or sooner”—in line with BlackRock’s pledge as a signatory to the Net Zero Asset Managers Initiative (NZAMI)—and asked businesses to disclose how they are integrating their own net zero plans into their long-term business strategies.
“Unfortunately, despite these repeated proclamations, in its September 6 response to the attorneys general, BlackRock now abdicates responsibility for driving net zero alignment in its own portfolio by saying that it does not ask companies to set specific emissions targets, and that its participation in NZAMI does not mean BlackRock is setting or meeting any net zero targets. BlackRock even goes so far as to tout its continued investment in fossil fuels—without specific net zero targets or commitments or any plan for a phased transition away from the very investments that increase carbon emissions—as somehow a necessary part of a transition to a green economy. A net zero goal that is not backed by a firm commitment to follow through is at odds with the path our economy must take to limit global temperature rise below 1.5°, or even 2.0°C.
“The fundamental contradiction between BlackRock’s statements and actions is alarming. BlackRock cannot simultaneously declare that climate risk is a systemic financial risk and argue that BlackRock has no role in mitigating the risks that climate change poses to its investments by supporting decarbonization in the real economy. As a fiduciary cognizant of the risks of inaction, BlackRock must demonstrate a plan to use its position as the world’s largest asset manager, with all the corporate governance responsibilities that go along with that position, to move its portfolio companies to get their businesses in line with a net zero economy.”
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“The Attorneys General from Arizona, Nebraska, Kentucky, and 16 other states who wrote to BlackRock on August 4, 2022, are waging a war of political distraction in the hopes of protecting the fossil fuel interests that have captured their states. We recognize the absurdity of Texas Comptroller Hegar’s recent directive to boycott BlackRock, which caters to short-sighted oil and gas interests, irresponsibly jeopardizes the returns of Texas pension funds, and potentially raises costs for Texas taxpayers. But political theater cannot and must not guide fiduciary actions.”
…
“The scale of the climate crisis surpasses the ability of any one person, company, or country to address alone, and none of us will be spared its financial impacts. The global finance community has a critical role to play in addressing the climate crisis, and BlackRock, as the world’s largest asset manager, must begin to lead in deeds, not simply words. The fact that building and operating renewable energy has now become cheaper than burning fossil fuels is a testament to what the financial industry can achieve when it mobilizes its resources to address climate change. We must now take the next steps necessary to fulfill that potential and responsibility.”
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