AP7, the largest of Sweden’s hefty national pension funds, has indicated that implications of BlackRock’s decision to quit the Net Zero Asset Managers initiative (NZAM) could affect whether it renews the estimated €28bn of its investment mandates the world’s largest asset manager currently runs.
Just days ahead of the inauguration of Donald Trump as US president, at the end of last week BlackRock left NZAM, saying its membership had caused confusion in some corners about its investment practices, and sparked legal challenges from Republican politicians.
Asked for AP7’s reaction to BlackRock’s decision, Johan Florén, the fund’s chief ESG and communication officer, told IPE: “BlackRock is one of our global equity managers and we will meet with them to better understand their decisions and the implications”.
Because AP7 did all its voting and engagement itself, however, Florén said, this was “not an immediate issue” for the Stockholm-based institution.
“But of course, anything relevant will be included in the evaluation in our recurring procurements,” he said.
Along with Northern Trust and UBS, BlackRock is one of the three external managers used by AP7, the SEK1.44trn (€125bn) default provider of Sweden’s first-pillar premium pension system, for its passive equities exposure – which constitutes the bulk of its SEK1.29trn equities fund.
AP7 said most of its equity is passively managed, but declined to be specific. If 75% of the allocation was managed passively, and BlackRock ran a third of that, IPE calculates this would mean BlackRock currently managed some €28bn for AP7.
More generally, Florén said, there had been a number of asset managers who had moved in the same direction as BlackRock in recent years – as a result of political pressure in the US.
“If this is the beginning of a wider divide between asset owners with a long-term perspective on systemic risk and non-aligned asset managers, this is a bigger problem,” Florén said.
“On the other hand, several of the asset managers leaving collaborative initiatives emphasise that their sustainability goals remain, so it is too early to say how serious the consequences will be,” he said.
IPE also asked Norwegian municipal pension fund KLP for its reaction to the BlackRock decision.
Arild Skedsmo, senior analyst, responsible investments at KLP Asset Management, said: “The backtracking on climate commitment by BlackRock and several other US investment companies is disappointing and dangerous.”
KLP is a shareholder in BlackRock, but does not have any direct business relationship with the asset manager, nor use them for investments, he said.
“We understand that the political winds have changed since BlackRock and others made their commitment, but the climate science has not,” said Skedsmo, adding that the “disastrous human and financial consequences of the warming climate” was now being felt across the planet, including in the US.
“The direction set by the world’s largest investment companies makes a difference and the consequences of their inactions will inevitably be felt as more suffering and a deteriorating global economy, which will in turn affect BlackRock’s customers,” he said.
Elsewhere in the Nordics, Norges Bank Investment Management (NBIM), which runs the NOK19.6trn Government Pension Fund Global (GPFG), declined to comment on the BlackRock decision.
BlackRock is one of NBIM’s external managers, and the GPFG also has a 1.6% stake in BlackRock with a $1.88bn (€1.83bn) holding at the end of June 2024.
In 2023, NBIM chief executive officer Nicolai Tangen interviewed BlackRock CEO Larry Fink for a podcast, talking to Fink on the topic of, inter alia, the ESG backlash.
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