BlackRock exits NZAM climate alliance amid growing political pressure
BlackRock has announced its departure from the Net Zero Asset Managers (NZAM) initiative following increasing pressure from Republican politicians over its climate efforts.
On Thursday, the world's largest asset manager, which manages $11trn in assets, confirmed in a letter to clients, obtained by the Financial Times, that it had decided to leave the climate alliance, citing that membership in the group “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.”
NZAM is a coalition of approximately 325 asset managers, overseeing around $50trn, that are committed to achieving net-zero alignment by 2050.
This development comes as BlackRock has faced mounting criticism from GOP lawmakers for its climate-related aims and policies. Alongside this, with the return of Donald Trump to the White House this month, political pressure surrounding climate change is expected to intensify.
In November, Texas attorney general Ken Paxton announced that he was taking BlackRock, StateStreet and Vanguard to court over alleged "conspiracy to manipulate energy markets" due to their participation in the Net Zero Asset Manager Alliance.
Further examples of growing pressure on BlackRock include a report from the House Judiciary Committee last month, which mentioned BlackRock, along with State Street and Vanguard, as being part of a group accused of “collusion and anticompetitive behaviour” in an effort to “impose radical ESG goals” on US companies.
BlackRock’s letter, signed by vice chairman Philipp Hildebrand and Helen Lees-Jones, global head of sustainable and transition solutions, stated: “Our participation in NZAM didn’t impact the way we managed client portfolios.”
“Therefore, our departure doesn’t change the way we develop products and solutions for clients or how we manage their portfolios.”
This news follows a significant exodus of financial firms from net-zero climate alliances in recent weeks, including major US banks such as JPMorgan Chase, Morgan Stanley, Citi, Bank of America, Wells Fargo, and Goldman Sachs, all of which have left the Net Zero Banking Alliance.
In February last year, BlackRock also scaled back its participation in Climate Action 100+, though BlackRock International remains a part of the coalition.
Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics, stated that BlackRock’s departure from NZAM would come as “no surprise to anyone.”
“BlackRock has hung in there as long as it could, but the pressure has become too great and the reputational and legal risks too high, just before Trump takes office. BlackRock wasn’t the first and won’t be the last financial organisation to quit a net-zero initiative,” she said.
While acknowledging this as a setback for NZAM, she suggested that “what matters more” is BlackRock’s real commitment to advancing decarbonisation and transition financing.
However, others in the sector have reacted more critically to BlackRock’s decision. Ben Cushing, campaign director for the Sierra Club’s Fossil-Free Finance Campaign, stated: “Membership in voluntary alliances sets an important baseline, but to truly fulfil its fiduciary duty to long-term investors, BlackRock must support real-world decarbonisation through stronger shareholder voting and by directing capital towards industries that mitigate systemic climate risks.
“If BlackRock won’t do that, its clients should find a different asset manager that will.”
BlackRock has confirmed its departure from the Alliance to Net Zero Investor was not available for further comment at this stage.
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