US chairman and CEO of BlackRock Larry Fink. Photo: Joël SAGET / AFP
Analysis - BlackRock is setting up a $2 billion fund with the government to invest in green energy. But what is BlackRock?
The Big Apple-headquartered firm is the world's largest asset manager and one of the biggest investors in fossil fuels globally, but is also blacklisted in Texas for being too 'woke'.
Its chief executive and billionaire co-founder Larry Fink today praised New Zealand for being a leader "in decarbonisation globally", but recently faced calls by climate activists to step down over accusations of 'green-washing'.
His position, and that of his firm, is the very definition of the cleft stick.
As the New York Times reported seven months ago: "Right-wing officials are attacking BlackRock for overstepping. Those on the left say the world's biggest asset manager is not doing enough".
The firm makes a very large target.
With $NZ15 trillion (trillion, not billion) in assets under management, it has been expanding into the Asia-Pacific recently, but has had a heck of a year at home Stateside.
Climate activists in Munich demonstrating against US wealth manager BlackRock and calling for debt relief for poorer countries during the G7 summit, on 28 June 2022. Photo: AFP/ Daniel Karmann
"The attacks have been unrelenting," the Washington Post reported in May, about an onslaught from the right, in this case.
"BlackRock executives have begun waving away the climate targets they once committed to helping the world meet as irrelevant to the current moment," the paper said.
Republican state politicians had pulled more than $6b out in protest that the funds BlackRock runs are going too far with the environmental, social and corporate governance (ESG) model Fink has championed - and still does, though in June he said he had stopped using the term "ESG" itself because it had become too politicised. Other US investors, though, put in more than $200b at the firm.
ESG encompasses ethically responsible business practices, from curbing carbon emissions to cracking down on workplace discrimination. Investments in such funds skyrocketed from 2019 to 2021, then plummeted worldwide last year, with Americans so leery the dropoff amounted to an actual 20 percent dropoff in the size of the combined US ESG funds, to $300b.
Governments are increasingly weighing in to back them, or set standards over them, so that a mere green-wash will not do.
BlackRock has been riding the tides both ways, at the same time.
"We are perhaps the world's largest investor in fossil fuel companies, and, as a long-term investor in these companies, we want to see these companies succeed and prosper," its head of external affairs told Texas lawmakers and industry groups in January.
The Financial Times last May reported BlackRock had warned it would not support most shareholder resolutions on climate change in 2022 because they had become too extreme or too prescriptive, especially around putting pressure on fossil fuel companies, when Russia's war in Ukraine had swung the needle on needing traditional fuel production.
On the other hand, Fink issues among the most influential of annual letters to global chief executives, delivering the phrase "climate risk is investment risk" and telling them last year "every company and every industry will be transformed by the transition to a net-zero world ... Will you lead, or will you be led?"
In Australasia, BlackRock has been getting into batteries.
Last year a subsidiary bought solarZero in New Zealand, which provides rooftop solar and battery storage, and put up more than $1b for a deal with battery storage Australian firm Akaysha Energy.
Today's $2b fund announcement with the government ups the commercial and political stakes.
"We are taking an important step with the launch of a New Zealand-focused strategy," said Fink on LinkedIn.
If there is a downside to any of this, investment banker Morgan Stanley does not seem to see it: It has forecast BlackRock's assets to almost double by 2027.
BlackRock told RNZ its role was to "give clients choice" about investing in the transition to a low-carbon economy, "from traditional energy such as oil and gas, to transition assets such as natural gas pipelines, to renewables such as wind and solar".
Any "plausible" switch would demand oil, gas and other regular energy sources, even if clean energy alternatives were rapidly built up, said a spokesperson today.
"We believe that investing in companies that are decarbonising - in industries such as steel, metals, utilities and mobility - could offer some of the biggest investment opportunities in the transition to a low-carbon economy."
Note - all values in NZD.
