ESG round-up: BlackRock CEO faces call for resignation over ESG ‘contradictions’

The latest developments in sustainable finance: Glencore cancels A$2bn coal mine; Crédit Agricole halts financing for new oil projects.

Activist investor Bluebell Capital Partners has called for BlackRock CEO Larry Fink to resign over the company’s allegedly inconsistent ESG strategy, and “hypocrisy” and “contradictions” on its ESG position. Bluebell also criticised the asset management giant for its recent “negative publicity” in the US. Bluebell told Responsible Investor: “It is sufficiently clear that there is an ESG problem at BlackRock and this is why we suggested precise remedies. Before taking further action, we will give BlackRock’s board of directors the chance to review the issues we highlighted and propose corrective actions. Based on the BoD response (or lack of thereof), we will review our options. Since we went public, we received a lot of support.”

In response to the accusations, a BlackRock spokesperson said: “In the past 18 months, Bluebell has waged a number of campaigns to promote their climate and governance agenda. BlackRock Investment Stewardship did not support their campaigns as we did not consider them to be in the best economic interests of our clients.”

Glencore has cancelled a A$2 billion ($1.3 billion, €1.3 billion) coal mine development in Australia. The miner cited royalty payments, global uncertainties and its net-zero 2050 goal as reasons for stopping the Valeria project. The mine, which is now under review, would have produced up to 20 million tonnes of thermal and metallurgical coal a year. The Australasian Centre for Corporate Responsibility has welcomed the decision, saying the coal mine “went against investor expectations and should never have even been considered”.

Crédit Agricole has halted financing for new oil extraction projects and set out plans to cut emissions tied to loans linked to five of its high-polluting sectors. The French group has also committed to reducing its loan exposure to oil production by 25 percent by 2025, an upward revision from its initial 20 percent target. Crédit Agricole made the decision following increasing regulatory and investor pressure to align with global climate goals. The UK’s Lloyds Banking Group and Dutch lender ING Group are among the few banks that have globally stopped providing funding for new oil projects. NGO Reclaim Finance has called on Crédit Agricole to go further and stop financing new gas extraction projects.

Norway’s sovereign wealth fund has announced plans to vote against companies that fail to set net-zero targets, overpay their senior members or do not have sufficiently diverse boards, according the Financial Times. The fund owns on average 1.5 percent of every listed company. CEO Nicolai Tangen said: “Yes, we can be [more vocal] and I think we will be… we can vote more against companies where we have different expectations about how they behave.”

DWS is approaching the end of an internal investigation that was initiated last year following greenwashing allegations. The German asset manager has spent the past year examining around 2 million documents in relation to the allegations, which prompted investigations by the Securities and Exchange Commission and German authorities. CEO Stefan Hoops has said that DWS is “fully committed to ESG” but will be careful not to use superlative language in the future.

A new study has uncovered a correlation between adverse biodiversity impact and corporate bond spreads. Researchers at the Amundi Institute looked at bonds issued by firms Australia and Brazil in sub-sectors with a negative impact on biodiversity factors. They found that spreads on the bonds widened in the wake of “acute biodiversity events”. The sub-sectors with the worst impact scores on biodiversity – according to the Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) – reacted the worst to negative biodiversity events.

The researchers tracked corporate spreads in the aftermath of negative biodiversity events such as flooding in New South Wales, comments by former Brazilian president Bolsonaro on Amazon deforestation, and the Brumadinho disaster. In Brazil, 40 percent of bonds which saw a widening of spreads after an “acute” event came from the paper sub-sector, while steel and commodity chemicals made up a third and 13 percent, respectively. For Australia, oil and gas exploration and production made up a third of the bonds, followed by highways and rail tracks on 17 percent and gas utilities on 13 percent.

The Green Finance Institute has launched an investor toolkit to create investment-ready nature projects and mobilise private finance into nature restoration. The platform is looking to accelerate the development of investment-ready nature projects in the UK by bridging the gap between project developers and investors, and mobilising the private sector finance required to meet the UK’s nature-related goals. The pathway guides project developers through initial scoping, identification and engagement with sellers and buyers, establishing governance structures, and signing legal contracts with key stakeholders.

The Climate Bonds Initiative has launched criteria and policy guidance to accompany its transition finance programme for the steel industry. The guidance includes requirements for credible investments and opportunities for policymakers to facilitate the industry’s net-zero transition. The criteria aim to encourage the sector to invest in transition by using available technology to increase efficiency, incentivise investments in low-carbon steelmaking technologies, record supply chain emissions and promote low carbon procurement. The report also suggests using green public procurement, targeted research and development initiatives to support green technologies, as well as strengthening carbon pricing with a framework against the risk of carbon leakage.

Border to Coast has re-appointed Robeco to support its voting and engagement work on behalf of its 11 LGPS Partner Funds, a mandate worth £20 billion of equity assets. Robeco was first appointed in July 2018 to support the pension pool’s voting and engagement priorities. B2C’s engagement work has grown in the past four years, with an increase of 9,000 voting resolutions from 2018/19 to 2021/22.