NYC comptroller writes to Larry Fink, accuses BlackRock of backtracking on climate

New York City comptroller Brad Lander has written to Larry Fink, warning that BlackRock’s investment actions “do not align with its climate commitments” and that New York will be reassessing its manager relationships through a climate lens.

In the letter, Lander shares his “growing concern that BlackRock is backtracking on its climate commitments, to the detriment of its portfolio, New York City’s pension funds, and our planet”.

Concerns highlighted in the letter include an alleged lack of detail on BlackRock’s net-zero targets, the absence of a plan to phase out fossil fuels in its portfolio, and a poor voting record on climate resolutions in the 2022 proxy season. BlackRock has previously said that many climate resolutions were too prescriptive.

Of particular concern is BlackRock’s response at the start of September to a letter by 19 Republican attorneys-general. While acknowledging that BlackRock has “repeatedly and rightly” recognised climate change as an investment risk, Lander says the firm “now abdicates responsibility for driving net-zero alignment in its own portfolio”. He points to BlackRock’s assertion in its response that it does not ask companies to set emissions targets and that its participation in the Net Zero Asset Managers’ Initiative does not mean it is setting net-zero targets.

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.

The letter makes three demands of the firm, warning that New York’s pension funds are unable to reach their net-zero goals without the support of their managers. In particular, Lander calls on BlackRock to:

• Publish an implementation plan that makes clear BlackRock’s commitment to achieving net-zero across its entire portfolio, with concrete steps that detail how it intends to reach science-based targets on a specific timeframe, and clear mechanisms to regularly report on Scopes 1, 2 and 3 emissions for all assets in BlackRock’s portfolio.
• Provide a detailed approach to keeping fossil fuel reserves in the ground and phasing out high-emitting assets.
• Support climate action through transparent corporate engagement that requires disclosure of climate-related lobbying, works to end lending and insurance for new fossil fuel supply projects, and pushes for science-based targets at portfolio companies.

Lander also pours scorn on Republican attacks on ESG and on BlackRock, calling a letter from a series of attorneys-general to BlackRock in August “a war of political distraction” and Texas’s recent move to divest BlackRock “absurdity”.

The letter ends with an ultimatum, warning that New York City’s pension funds will be “prudently reassessing our business relationships with all of our asset managers, including BlackRock, through the lens of our climate responsibilities”.

New York has previously raised the possibility of pulling its funds from BlackRock, with Lander saying in August that the city will “need to start asking” when to pull funds over its climate actions.

BlackRock declined to comment, but the firm has previously highlighted that it believes its role is not to engineer a specific decarbonization outcome in the real economy but to help clients navigate investment risks. It anticipates that 75 percent of its corporate and sovereign investments will be invested in issuers with science-based targets or equivalent.