BlackRock discontinues membership in New Zealand's climate alliance due to escalating political pressures
In a significant move for the climate change landscape, BlackRock, one of the world's largest asset managers with over $11 trillion in assets, has decided to leave the Net-Zero Asset Manager Alliance (NZAM). The decision comes amidst increasing political and regulatory pressures in the United States, particularly following the reelection of President Donald Trump.
The NZAM, a coalition of approximately 325 asset managers overseeing around $50 trillion, has been subject to scrutiny due to accusations of imposing radical environmental, social, and governance (ESG) goals. This scrutiny has led to legal inquiries from various public officials, including the Texas attorney general Ken Paxton, who announced in November that he was taking BlackRock, StateStreet, and Vanguard to court over alleged "conspiracy to manipulate energy markets" due to their participation in the NZAM.
The withdrawal of BlackRock, along with other major financial institutions, from climate coalitions like the Net Zero Banking Alliance (NZBA) could weaken the influence and effectiveness of these alliances in driving capital towards decarbonization and sustainable investments. The loss of members undermines collective action frameworks designed to align lending and investment portfolios with 2050 net-zero greenhouse gas emission targets, potentially slowing progress on climate goals.
Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics, has stated that BlackRock's departure from the NZAM was "no surprise". She emphasizes that what matters more is BlackRock's commitment to advancing decarbonisation and transition financing. However, Ben Cushing, campaign director for the Sierra Club's Fossil-Free Finance Campaign, has reacted critically to BlackRock's decision, stating that while membership in voluntary alliances is important, BlackRock must support real-world decarbonisation through stronger shareholder voting and directing capital towards industries that mitigate systemic climate risks.
BlackRock's support for climate resolutions has reportedly dropped, with it being labeled as "not financially material". This criticism has been compounded by mounting criticism from GOP lawmakers for BlackRock's climate-related aims and policies. Despite this, BlackRock maintains that its departure from the NZAM didn't impact the way they manage client portfolios. However, at the time of writing, BlackRock has not provided further comment on its departure from NZAM.
This news follows a wave of departures by other large U.S. banks and financial institutions from similar alliances, linked closely to political opposition to ESG efforts and ongoing legal and regulatory scrutiny aimed at large asset managers for their climate-related investment practices. As the climate change debate continues to evolve, it remains to be seen how the financial sector will respond to these challenges and whether more asset managers will follow BlackRock's lead.
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