NY City funds ‘will need to start asking’ whether to pull back from BlackRock over climate

Brad Lander said blue states 'can do a lot better' at addressing the ESG backlash, and states with anti-ESG laws 'are making really foolish decisions'.

New York City comptroller Brad Lander has become the latest US figure to criticise BlackRock, as he warned that the city’s $250 billion pension funds will “need to start asking” when they should pull funds from the manager over climate.

Speaking at an event organised by New York climate activists, entitled “Standing up to BlackRock, the World’s Largest Investor in Climate Destruction”, Lander said there is “a big yawning gap for many [managers], BlackRock included, between the pledges or commitments they’ve made and what they’re actually doing”.

He added: “There is simply no way we can hit the goal we have of being net zero by 2040 if our investment managers are not serious about that as well.”

The comptroller’s office is set to finalise a transition plan in October after three of the city’s five funds committed to net zero by 2040, but Lander said it would be difficult to reach its targets “if our biggest manager isn’t on board and isn’t aligned”. BlackRock is the largest manager for the city’s five pension funds. Responsible Investor understands it was responsible for $62.5 billion of New York pension money at the end of May.

Lander aired several specific criticisms of BlackRock, including the reduction in the number of climate proposals supported by the asset manager at AGMs this year and its anticipation that it will have 75 percent of assets invested in issuers with science-based targets or equivalent by 2030. He argued that this figure should be 100 percent, and called on the manager to join shareholder action to push financial institutions to stop funding expansion of fossil fuel infrastructure and to develop “a real plan” for the phase-out of its highest-emitting assets.

While the comptroller’s office is not currently looking at manager relationships, Lander said the transition plan will “make clear we can’t possibly hit the goals we’re committed to if our largest managers don’t do it and we will need to be looking at all our business relationships through this lens of: ‘Are they consistent with our net zero commitment?’”

Asked by RI whether there was a point at which the city would consider pulling funds from BlackRock, Lander said: “That’s a great question that I welcome being asked and I’m not yet ready to lay a marker down on […] but I think we will need to start asking it.”

A spokesperson for BlackRock declined to comment but sent a link to the firm’s 2030 net zero statement, where it anticipates it will have 75 percent of assets invested in issuers with science-based targets or equivalent by 2030. The current figure is 25 percent.

‘Red states are louder’

Lander also shared his frustration with the wave of anti-ESG sentiment sweeping the US.

“A lot of us who spend our time on ESG were just slogging through to try to get Wall Street to pay a little bit of attention to long term issues [and] are now kind of stunned to see how rapidly the backlash is moving,” he said.

He added said that addressing this backlash “is a place where I think we can do a lot better”. New York City is a member of For the Long Term, a network of mostly Democratic state treasurers, and the group recently held “a little retreat” about the anti-ESG backlash and how to respond to it.

Red state anti-climate finance activism, he continued, “is louder – they have done a good job”.

“Let’s be clear, they’re just doing the bidding of fossil fuel companies in their states, trying to throw up a smokescreen in order to protect fossil fuel burning industries … It’s a little bizarre because they’ve somehow made it seem like Wall Street is woke, and Wall Street is who is doing the investing in fossil fuel expansion.”

Lander pointed to evidence that cutting off financial institutions over ESG issues leads to higher costs for states. “The states that do it, we think, are making really foolish decisions. But in the meantime, their voices are being heard by Larry Fink, by BlackRock, by other asset managers.”