BlackRock, the world’s largest asset manager, recently withdrew from a prominent climate change policy with Net Zero Asset Managers initiative (NZAM), a coalition committed to achieving net-zero greenhouse gas emissions by 2050.
The firm cited last week that its membership had “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.”
The management agency also said its current investment portfolio managers will “continue to assess material climate-related risks.”
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Meanwhile, the nonprofit Consumer’s Research president Will Hild told Fox Business the withdrawal comes on the heels of a major lawsuit involving the asset management company.
In Spence v. American Airlines, Inc., a federal court found that American Airlines and some employees violated their legal responsibilities under the Employee Retirement Income Security Act (ERISA). The violation involved offering BlackRock-managed funds, such as S&P 500, Russell 1000, and Russell 3000 index funds, in the company’s 401(k) plans. Hild said the ruling raises concerns that other businesses offering similar funds might face similar legal challenges.
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In a letter sent to every Fortune 500 company warning them of risks associated with Black Rock first obtained by Fox Business, Hild wrote, “Although BlackRock exited one of its net zero alliances last week, the firm proudly proclaimed that the ‘departure doesn’t change the way… we manage [clients’] portfolios.’ And BlackRock maintains its membership in UN PRI where it has pledged to ‘incorporate ESG issues into [its] ownership policies and practices.’”
“Fiduciaries, therefore, risk violating their duties by continuing to entrust plan assets to BlackRock,'” the letter stated. “In conclusion, any corporation or company using BlackRock to manage their pension plans is now effectively aware that BlackRock has acted with a dual motive in the past and is still publicly committed to doing the same moving forward.”
“Net Zero” commitments became widespread after 2021 following a United Nations climate conference. Conservative lawmakers generally oppose these policies, arguing that they could harm economic growth, particularly in energy-producing states. They often criticize such policies as “woke capitalism,” claiming they could lead to higher energy costs, job losses in traditional energy sectors and unnecessary government intervention.
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Hild told Fox Business he believes President-elect Donald Trump’s win weighs in favor of rolling some of these leftwing initiatives back, but the antitrust case was likely the cause of exiting its Net Zero commitment since the company only rolled back part of the commitment.
“I care about shareholders, but I care more about consumers,” Hild said. “And the problem is, all this ‘Net Zero’ stuff raises costs that then have to be passed along to the consumer,” Hild said. “It’s about raising costs everywhere, from the gas pump to the grocery store, and significant contributor to inflation.”
A NZAM spokesperson told Reuters the withdrawal was disappointing and that “Climate risk is financial risk.”
“NZAM exists to help investors mitigate these risks and to realise the benefits of the economic transition to net zero,” the spokesperson said.
Fox Business has reached out to NZAM for additional comment but did not hear back by publication deadline.
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