The world’s largest asset manager has said it will not use its stewardship and voting power to achieve specific real-economy decarbonisation goals.
In its latest investment stewardship note, BlackRock insisted its team “cannot – and does not try to – direct a company’s strategy or its implementation” when it comes to climate change.
“It is not our role to engineer a specific decarbonisation outcome in the real economy,” it wrote, noting that its duty was solely to “advance our clients’ long-term financial interests”.
Echoing recent remarks made by Günther Thallinger, a board member at Allianz, BlackRock said: “The money we manage is not our own – it belongs to our clients, many of whom make their own asset allocation and portfolio construction decisions.”
Thallinger said during an interview with IPE last year that asset managers are simply service providers for asset owners, and so it was “not relevant” whether they had net zero commitments or not.
But BlackRock’s promise not to influence portfolio companies’ strategies through its stewardship efforts appears to be at odds with the position of many large European pension funds and insurers, who believe one of the primary objectives of engaging with firms is to push them to behave in a way that aligns with their own sustainability objectives.
Members of Climate Action 100+, for example, are expected to ask their portfolio companies to “take action to reduce greenhouse gas emissions across the value chain” and “implement transition plans to deliver on robust targets”.
Early last year BlackRock withdrew its US arm from Climate Action 100+.
In 2021, BlackRock identified “implementing plans to transition to a low-carbon economy” among its engagement priorities, but its latest note said that it “does not make the preparation and production of transition plans a voting issue”.
Around a quarter of the asset manager’s investments into corporate and sovereign issuers is allocated to those with “science-based targets or equivalent”, according to its website.
It predicts this figure will jump to 75% over the next five years.
BlackRock reiterated its long-standing request for portfolio companies to report in line with the expectations of the International Sustainability Standards Board or the Taskforce on Climate-related Finance Disclosures, so that it can evaluate their performance and approach to risk management.
Such disclosures, it continued, enabled investors to see how firms are managing their direct emissions “to the extent financially practicable”.
BlackRock is currently subject to a lawsuit in the US, brought by Republican politicians who allege that a number of asset managers have used their influence over coal companies in ways that flout competition laws, in pursuit of decarbonisation goals. BlackRock denies the claims.
The New York Post reported this week that BlackRock was considering leaving the Net Zero Asset Managers initiative, although it didn’t provide any details about the source of its information. Insiders tell IPE an announcement could be due by the end of the week.
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