New York City Comptroller Brad Lander slammed a decision by BlackRock Inc., its largest external money manager, to appoint the chief executive of the world’s biggest oil company to its board.
(Bloomberg) — New York City Comptroller Brad Lander slammed a decision by BlackRock Inc., its largest external money manager, to appoint the chief executive of the world’s biggest oil company to its board.
“BlackRock has clearly stated that climate risk is an investment risk, but actions speak louder than words,” New York City Comptroller Brad Lander said in an emailed statement. “At a time when financial institutions need to take a collective approach to addressing the financial risks from climate change, BlackRock shareholders expect climate-competent, not climate-conflicted, directors.”
BlackRock this week named Saudi Aramco Chief Executive Officer Amin Nasser to its board, underscoring the investment firm’s commitment to the oil industry. The move comes as BlackRock finds itself at the center of a highly politicized debate around environmental, social and governance investing, with Republicans accusing it of focusing too much on climate change and social issues.
Environmentalists, meanwhile, have criticized BlackRock for its continued support of the fossil-fuel industry.
A spokesman for BlackRock declined to comment.
New York’s pension plans oversee about $250 billion. They were among the first in the US to set targets to cut greenhouse gas emissions across their investments. Lander said last year that BlackRock had backtracked on some of its climate pledges and, as a result, the New York City pension plan had been in conversations with the firm, saying that it couldn’t meet its own emissions goals if its money managers don’t meet theirs.
BlackRock managed about $54.6 billion for all five New York City pensions as of the end of April, of which $42.9 billion was for the three pension funds that have set net zero emissions goals, the comptrollers office said.
Larry Fink, BlackRock’s CEO, said Nasser’s “leadership experience, understanding of the global energy industry and the drivers of the shift toward a low-carbon economy, as well as his knowledge of the Middle East region, will all contribute meaningfully to the BlackRock board dialogue,” in a statement earlier this week.
Nasser has criticized ESG in the past. In February, he told investors gathered in Riyadh that ESG-driven policies that have “an automatic bias against any and all conventional energy projects” will result in underinvestment with serious implications for the global economy, energy affordability and energy security.
Ulf Erlandsson, CEO of the Anthropocene Fixed Income Institute, said it’s likely more clients will question how effectively BlackRock will be able to engage with portfolio companies over climate issues, given its new ties to Aramco.
“This raises an interesting question, how should clients who exclude Aramco from their investment portfolios view the fact that Aramco is becoming an even more important voice at the service provider?” Erlandsson said. “It is possible that this move will trigger some client uneasiness; the flip side to the anti-ESG fire that BlackRock has come under in the US.”
Aramco is widely blacklisted among ESG funds, due to the detrimental effect of its fossil-fuel business on a planet already buckling under the fallout of climate change. Sustainalytics deems Aramco’s ESG risk to be “severe,” which is worse than more than 95% of the entities it tracks. Bloomberg LP, the parent of Bloomberg News, also provides ESG rankings: its current score for Aramco indicates the firm is underperforming peers.
Zsolt Lengyel, a founding member of the Institute for European Energy and Climate Policy, described the link between the world’s biggest asset manager and its largest fossil-fuel producer as an “own-goal for the planet.”
“Aramco will get smarter at greenwashing,” he said by email. And BlackRock won’t get “anything useful” from the alliance, he said.
(Adds comment from clean energy expert, Aramco ESG scores, in final paragraphs.)
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