Dive Brief:
- BlackRock has departed the United Nations-backed Net Zero Asset Managers initiative, a company spokesperson confirmed to ESG Dive Friday morning.
- BlackRock Vice Chair Phillipp Hildebrand and Global Head of Sustainable and Transition Solutions Helen Lees-Jones broke the news in a Thursday letter to clients, reported earlier by Bloomberg.
- The exit comes as incoming President-elect Donald Trump and Republican majorities in the House and Senate have increasingly turned such memberships into a target list in recent years. Six of the largest U.S. banks left a similar bank initiative, the Net Zero Banking Alliance, within the past month, including five of the six largest banks in the country by assets.
Dive Insight:
With BlackRock’s NZAM departure, State Street is the last of the nation’s three largest asset managers to remain in the alliance, according to NZAM’s signatory list. Vanguard was a member before exiting in 2022.
Hildebrand and Lees-Jones said BlackRock’s membership in NZAM was creating confusion around the firm’s practices and left the firm subject “to legal inquiries from various public officials,” according to Bloomberg’s reporting on the letter. Though the BlackRock spokesperson confirmed the authenticity of the client letter, they declined to share a copy with ESG Dive.
BlackRock has been placed on several states’ watchlists, blacklists and been subject to probes as a result of its membership in NZAM and perceived stances on topics like fossil fuels. However, Hildebrand and Lees-Jones’ letter said its NZAM participation “didn’t impact the way [BlackRock] managed client portfolios.”
“Our departure doesn’t change the way we develop products and solutions for clients or how we manage their portfolios,” the firm reportedly told clients. “Our commitment to helping our clients achieve their investment goals remains unwavering.”
NZAM members — as well as memberships of similar groups NZBA and Climate Action100+ — have been the targets of multiple Republican-led probes at the state and federal level. GOP members on the House Oversight, Judiciary and Financial Services Committees all conducted ESG-related investigations over the past two years, which could be revived with additional legislative power now that Republicans also control the Senate and White House.
The House Judiciary Committee had previously sent a letter to BlackRock and the other more than 60 U.S.-based members of the NZAM that had a response deadline of noon on Friday, according to a December press release. House Judiciary Chair Jim Jordan said in an emailed statement to ESG Dive on Friday that his committee’s investigation helped push BlackRock out of the group.
“This is a huge win for freedom and American prosperity,” Jordan’s statement said. “All U.S. financial institutions should follow suit and abandon the climate cartel and woke ESG policies.”
BlackRock has also been targeted by various state probes and legislation. In addition to getting cease-and-desist notices from the states of Indiana and Mississippi last year, BlackRock, Vanguard and State Street were sued last month by Texas and a group of Republican-led states and accused of being a “cartel to rig the coal market.”
BlackRock’s move comes the same week JPMorgan Chase joined the wave of defections from NZBA. JPMorgan’s Tuesday exit followed Bank of America, Citigroup, Morgan Stanley, Goldman Sachs and Wells Fargo all ending their membership within the past month.
Signatories to the UN’s asset manager initiative commit to reaching net-zero alignment by 2050 or sooner. The group still has commitments from around 325 asset managers who have more than $57.5 trillion in assets under management, which still include J.P. Morgan Asset Management, State Street and Franklin Templeton Investments — all among the over 70 members of CA100+ who have departed since the House Judiciary started its investigation.
In its annual securities filing for 2023, BlackRock acknowledged that mounting scrutiny from stakeholders, regulators and clients on ESG issues could “adversely impact” the company’s reputation and business.
Financial institutions are now looking to dodge spending time being called for various hearings due to their climate alliance memberships in 2025, Environmental Advocates NY Executive Director Vanessa Fajans-Turner previously told ESG Dive following JPMorgan’s NZBA exit.
“This is all about the new political moment the U.S. is entering with the change in presidential administration,” Fajans-Turner said in an interview. “There has been a long and awful sort of war waged against the ESG movement by Republicans and the fossil fuel industry, and now that many of the leaders of that movement are gaining power in federal agencies and circles, banks are seeing the writing on the wall.”
Fajans-Turner added that CEOs of financial institutions did not include “brief Jim Jordan on what climate risk means in their 2025 resolutions.”
Update: This story has been updated to include comments from House Judiciary Chair Jim Jordan.
