BlackRock to leave major climate group in latest Wall Street exodus

Boston — BlackRock, the world’s biggest asset manager, said on Thursday it would leave the Net Zero Asset Managers Initiative (NZAMI), Wall Street’s latest environmental step-back amid concerns raised by Republican politicians.

BlackRock, which manages about $11.5-trillion, said that with two-thirds of its global clients committed to cutting emissions to net zero, it had made sense to join groups such as NZAMI.

“However, our memberships in some of these organisations have caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials,” leading to the departure, according to a client letter shared by a company representative.

NZAMI members pledge to support the goal of net-zero greenhouse gas emissions by 2050, using influence such as how they vote their proxies at corporate meetings. The group has more than 325 signatories managing more than $57.5-trillion, according to its website.

Major Wall Street lenders have left a similar climate organisation for banks in recent weeks ahead of the return of Republican US president-elect Donald Trump and other Republicans to Washington. While the departures may not have a direct effect on lending or share purchases, the companies’ participation was seen as a marker of investors’ environmental priorities.

BlackRock’s exit could prompt others to follow suit, though on Thursday a representative for the asset-management arm of State Street Corporation, a BlackRock rival, said it remains a member.

Efforts such as NZAMI, which was created in 2020 and boosted by a 2021 UN climate conference, began without controversy as world leaders looked for ways to harness capital to transition the world to cleaner energy sources.

But Republicans, many from energy-producing states, have disparaged the efforts as “woke capital” that violated antitrust laws. In December, a Republican-led congressional committee sought information from BlackRock and dozens of other asset managers in NZAMI.

In November, BlackRock and rivals were sued by Texas and 10 other Republican-led states that claimed their activism cut coal production and boosted energy prices.

BlackRock has denied wrongdoing and said the lawsuit “discourages investments in the companies consumers rely on”.

In Thursday’s client letter, BlackRock said its departure “does not change the way we develop products and solutions for clients or how we manage their portfolios. BlackRock’s active portfolio managers continue to assess material climate-related risks, alongside other investment risks, in delivering for clients.”

Reuters