Report Finds BlackRock Still Deeply Invested in Coal, Sustainability Push "Superficial"

If you find this post interesting, you can sign up for the firm’s monthly newsletter here. Each month’s newsletter contains a roundup of blog posts and commentary on climate news, law and policy.

In its recent report One Year On: BlackRock still addicted to fossil fuels, French sustainable finance organization Reclaim Finance details how American financial giant BlackRock’s public declaration to make sustainability its new investing standard has, one year later, yielded only  “half-hearted” and “superficial” results. As the report states, “the action taken is utterly insufficient to truly curb investments in the sector most problematic when it comes to climate change: fossil fuels.” 

In last year’s client letter where BlackRock outlined its purported shift to sustainable investing, the firm’s only commitment with respect to fossil fuel divestment was “exiting thermal coal producers”. As outlined in the letter, BlackRock would exclude active (but not passive) investments in mining companies with more than 25% of revenue attributable to coal production. Since then, the firm has announced no further policies regarding divesting from or avoiding investments in oil and gas.

Despite its new public anti-coal posturing, the report found that BlackRock “remains a massive investor in coal companies and...companies planning new coal projects,” with “at least” $85 billion invested in coal companies. With respect to its passive investment funds, which constitute most of the firm’s assets, the report found that BlackRock is highly exposed to “coal assets likely to become stranded” and “other fossil fuels”. 

The report also takes issue with BlackRock’s sustainable ETF offerings, which were likewise touted in the client letter, finding that only 3% of subsidiary ETF provider iShares’ assets were in “sustainable” ETFs. Further, the report highlighted BlackRock’s poor performance of engagement as a corporate shareholder: in 2020, the firm voted against 88% of pro-climate shareholder resolutions. 

As I’ve written previously on this blog, finance is a largely conservative industry sporting a long, deeply-enmeshed relational history with traditional energy producers. Cleansing a large established firm like BlackRock of traditional energy investments would require immense resolve, and bold, ambitious, even daring activity on the part of its management. BlackRock CEO Larry Fink has not shown himself capable of this.