BlackRock Quits Major Net Zero Alliance Ahead of Trump Inauguration As Number of Wall Street Lenders Shying Away From Sustainability Efforts Grows

Membership in the alliance “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials,” the firm said last Thursday as it announced its departure from the Net Zero Asset Managers initiative.

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BlackRock, the world’s largest investment management corporation, announced last week it will leave a key international group of asset managers committed to reaching net zero emissions amid a recent Wall Street firms exodus.

The group, which manages assets worth some $11.5 trillion, said the decision to leave was prompted by pressure from public officials and legal inquiries.

The New York-based firm has long been at the center of attacks from conservative lawmakers for embracing what they call “woke” policies. In a report published last month, Republican-led House Judiciary Committee said it had found “evidence of collusion” between “left-wing activists and major financial institutions” to “impose radical environmental, social, and governance (ESG) goals on American companies.”

In November, Texas sued Blackrock and investment firms Vanguard and State Street for allegedly breaching antitrust laws by adopting green strategies that suppress coal production, leading to higher electricity prices.

Membership in the Net Zero Asset Managers initiative “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials,” the firm said last Thursday as it announced its departure.

The alliance launched in December 2020 to support the asset management industry to commit to a goal of net zero emissions in order to mitigate financial risk and to maximize long-term value of assets. The group currently has over 325 signatories managing more than $57.5 trillion of assets, according to its website.

BlackRock’s exit comes on the heels of a trend where major Wall Street banks are stepping back from climate initiatives ahead of Donald Trump’s inauguration later this month.

The six biggest banks in the world’s largest economy – Goldman Sachs, Wells Fargo, Citi Bank, Bank of America, Morgan Stanley, and JPMorgan – recently quit the Net-Zero Banking Alliance, the sector’s biggest climate coalition. While not directly citing it as an influencing factor, the banks have for some two years been the focus of a Republican-led campaign against environment, social and governance investing.

Analysist say the moves send a clear signal to the market that climate change has become even less of a priority for Wall Street.

Enabling Deforestation

In 2020, BlackRock made headlines when its CEO, Larry Fink, said the firm would start making its investment decisions with climate change in mind. Fink sent a letter to clients promising to exit the coal sector and “play a constructive role” in supporting the Paris Agreement.

However, environmental NGO Friends of the Earth at the time accused the company of conspicuously neglecting to include a promise to stop investing in companies that cause deforestation.

According to a report the NGO released a few months later, BlackRock, Vanguard and State Street had either abstained from or voted against corporate shareholder resolutions to fight deforestation a total of 16 times. While not all of those resolutions would have passed even with their support, the report said the votes sent a signal to executives in those companies that big investors do not consider protecting the world’s rainforests to be a priority.