Emails reveal the high-wire act of major banks and BlackRock, the world’s largest asset manager, as they secretly soothe oil industry concerns over their public support for greener investments.
Larry Fink, BlackRock boss, said in his annual letter addressed to chief executives that climate action was not about being awakened but about pursuing clients’ profits.
These comments were widely interpreted as a signal that the asset manger, whose clients have entrusted $10tn of their assets to it, would use its investment clout for greener ventures.
Emails obtained by the Bureau of Investigative journalism and InfluenceMap via a Freedom of Information Request show that a Texas regulator believed BlackRock had changed its mind after he met with them.
After the meeting with BlackRock employees, Wayne Christian (chair of the Texas oil regulator) wrote to the company on 7 January 2022 expressing his relief.
He stated that he was concerned by the promotion of investment governed by environmental or social guidelines (ESG) by asset managers. This typically involves selling out of oil stocks.
He stated that it was nice to know that BlackRock did not mean or believe many of the negative things Mr Fink and the company have said about oil and gas.
Christian wrote in an enclosed letter that BlackRocks staff had misrepresented its environmental stance to the media and that they were supportive of the oil-and-gas industry.
Christian was not asked to question his interpretation, but a BlackRock employee responded that he had pointed to Fink’s comments. Fink said traditional energy companies were part and parcel of the solution along with environmental investment policies.
BlackRock claimed there was no contradiction between its public statements, and its private conversations to Christian.
Since January 2020, BlackRock has consistently stated that climate risk is an investment concern that will impact returns on investors’ portfolios. This is because companies must navigate both the transition and physical risks associated with climate change.
We believe that climate-integrated portfolios and sustainability can provide better risk-adjusted returns for our clients.
BlackRock has always maintained that energy companies play an important part in the global economy and in a successful transformation.
We expect to stay long-term investors within carbon-intensive sectors. We don’t pursue broad divestment of sectors or industries as a policy.
Anusha Narayanan (climate campaign manager at Greenpeace USA) said that it seemed like BlackRock was trying too hard to have their cake and eat It.
We need to stop making the false choice between a healthier planet and a healthier economy. Fossil fuels offer neither. IPCC report last weekIt was clear that climate changes are already causing severe damage to the environment and ecosystems all over the globe, and it is becoming increasingly difficult to reverse these effects.
Financial regulators consider the climate crisis a threat to the stability and viability of the US financial system.
BlackRock is a company that invests in a carbon-free future. This means that they must immediately divest from oil and coal.
While BlackRock managed to walk the fine line between greener investments, and remaining on the right side for oil industry advocates, US banks have been subject to similar pressure from oil-rich countries, in one instance requiring a change in policy.
In November, the treasurers from 15 US states that control more than $600bn of funds sent an open letter threatening the banking industry. They threatened to withdraw financial institutions that support fossil fuel companies.
A second Freedom of Information request shows that US Bank wrote to West Virginia’s state treasurer, who coordinated the letter. It stated that it wanted to keep its relationship with the state, which is a major coal producer, for many more years.
Tim Rieder, senior Vice-President at US Bank, wrote: Personally, I completely agree with the [treasurers] letter.
The US Bank appeared to have changed its investment policy and removed a pledge to not invest in coal.
US Bank stated that it had not changed its policy despite pressure from the US states and that its investment policy hadn’t prohibited financing coal-fired electricity since October 2020.
However, US Bank’s 2021 environmental responsibility policy (which was posted on the bank website last week) prohibited it from financing coal-fired power.
Texas was also assured by a host of banks after it passed a law that required financial institutions to verify that they are not supporting energy companies.
The pledge was signed by 39 institutions, including Citigroup, UBS, Wells Fargo, Barclays and Citigroup.
Barclays stated that it is aligning its entire financing portfolio with the Paris goals and timelines. [climate]We are on our way to becoming a net-zero bank by 2050.
UBS stated it supports the Paris agreement’s goals and added: UBS considers engagement with companies across all industries fundamental to any sustainable investing strategy.
Citigroup stated: Our policies focus on responsibly managing the transition to energy, not banning the sector. This position was communicated consistently to all stakeholders.
Wells Fargo declined comment.