How sustainable is BlackRock’s investment?
The world's largest asset manager is also one of the largest investors in the fossil fuel industry. All while declaring sustainability as a "key component" of its investment strategy. Is this reflected in its investments?
Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development is one of the three main objectives of the Paris Climate Agreement. As such, significant responsibility is ascribed to the world's largest investor and one of the largest investors in the fossil fuel industry - BlackRock To meet this responsibility, BlackRock published a climate strategy in 2020 and announced its intention to make sustainability its new investment standard.
BlackRock's investments in the fossil fuel industry
BlackRock's investment data in Switzerland – which was collected for the "Spotlight on BlackRock" project - paint a different picture: the investment corporation is one of the most significant shareholders of Glencore (9.2%), the Swiss heavyweight in the fossil fuel industry. Glencore is one of the world's largest coal producers and is currently developing a new coal mine in Australia. BlackRock is also the second largest shareholder in Credit Suisse (6.1%), whose climate strategy is rated as one of the worst in the world according to the report Banking on Climate Chaos. Moreover, BlackRock is a major investor in Lafarge Holcim (6.1%), the world leader in cement production - an industry that accounts for 8% of global CO2 emissions. The 2021 development of BlackRock's financial involvement in Transocean, the world’s juggernaut in oil and gas drilling based in Zug, is similarly striking. After BlackRock had already voiced criticism of the drilling company’s climate related reporting at its annual general meeting, the US asset manager sold around two-thirds of its shares. The reasons for the sale were not commented on publicly.
While BlackRock appears to be critical in the case of Transocean, its proxy voting behaviour at other companies’ shareholder meetings certainly continues to raise eyebrows when it comes to its commitment to climate sustainability. In 2020, for example, the asset manager voted against 88% of shareholder resolutions on climate and social issues worldwide, as calculated by the responsible investment NGO ShareAction.
Climate risks as investment risks
The focus of BlackRock's climate strategy lies on climate-related financial risks, as the firm explains: "BlackRock believes that sustainability risk, particularly climate risk, is investment risk." Consequently, BlackRock expects companies to have clear policies and action plans in place to manage climate risks, it adds.
Does BlackRock's focus on climate-related financial risks automatically lead to more climate protection and compliance with the Paris Climate Agreement? Can this focus be accurately traced back to how Glencore, Transocean or Credit Suisse comply with the Paris Climate Agreement and how these investments are in line with the principle of "sustainability as a new investment standard"?