The latest installment of the environmental, social and governance policy war pits the world’s largest ETF provider against the Big Apple.
In a letter to BlackRock Inc. Chief Executive Officer Larry Fink, New York City Comptroller Brad Lander demands the company bolster its climate disclosures and publish a plan that establishes its commitment to net-zero greenhouse gas emissions across its entire portfolio. Lander told ETF.com that he sent the Sept. 21 letter because the city is in the midst of putting in place a plan to reach net-zero emissions.
“We're thinking about what we'll need to be asking, pushing, requiring of our managers in order for us to hit this goal,” he said in an interview. “BlackRock is our biggest manager by far and therefore a logical place for us to start.”
He added that the city agency’s proposed requirements for emissions reporting goes a bit further than even the hotly debated potential rules from the Securities and Exchange Commission.
The communication comes just weeks after BlackRock came under fire from 19 Republican Attorneys General who accused the firm of collaborating with climate activists instead of siding with clients.
BlackRock said earlier this month, in response to the Republican attorneys general, it doesn’t force companies it invests in to lower emissions and that it’s still putting money into the fossil fuel industry, an acknowledgment Lander labeled as “alarming” and a “fundamental contradiction between BlackRock’s statements and actions.”
“We do not pursue broad divestment from sectors and industries as a policy – particularly as a portfolio fully divested of such sectors in the near term may be at odds with enabling an orderly transition to a net-zero economy in the long term,” BlackRock’s 2030 net zero statement reads.
Blackrock currently touts 220 funds in the United States, 19 of which are labeled broad or thematic ESG funds, according to their website.
New York City currently invests nearly $43 billion with New York-based BlackRock via three pension funds that have made climate pledges. This isn’t the first time the city’s financial management arm has issued a statement to the asset manager, but it is the first time it has hinted at a possible reinvestment of its portfolio elsewhere.
“We will be prudently reassessing our business relationships with all of our asset managers, including BlackRock, through the lens of our climate responsibilities,” the letter reads.
This might just be the first in a series of pension-related headaches for BlackRock. A recent survey from Morningstar shows a sample of the research firm’s public pension funds, which hold $3.4 trillion in assets, vote 90% of the time in favor of ESG shareholder resolutions.
But for some, the comptroller's demands that BlackRock commits to net-zero emissions across the firm's portfolio is implausible.
"Reducing carbon emissions and alignment is fine. But as [the] largest asset manager in the world, I think trying to demand that it does not accept any customers who want exposure to those fields is absolutely beyond the pale," said Herbert Blank, senior consultant at financial services consulting firm Global Finesse.
Contact Shubham Saharan at [email protected]