BlackRock has once again found itself in the middle of the ESG investing debate. Previously, Texas targeted BlackRock for its ESG investment policies. Texas banned state entities from doing business with the firm, arguing that it pursued social objectives over financial returns. Additionally, the Texas AG filed antitrust litigation against Vanguard and BlackRock. However, after its capitulation and withdrawal from the Net Zero Asset Managers (NZAM), BlackRock was unbanned by the state, though the antitrust litigation continues.
This time, it is pro-ESG forces that are divesting funds from the asset manager. BlackRock is facing scrutiny from European funds that are still committed to sustainability. Most recently, Dutch pension fund PME Pensioenfonds pulled its investments, stating in a press release that:
“In 2022, we began defining relevant ESG themes and ambitions for PME. These were translated into an ESG framework covering three categories: environment (climate and environmental impact), social (working conditions, living wages, etc.), and governance (board structure, transparency, ethics, etc.). Using this ESG framework, we constructed an ESG index portfolio in 2024 consisting of approximately one thousand companies in developed markets. Together with a focused portfolio of about 250 companies, this forms our ‘Portfolio of Tomorrow’—an equity portfolio in which every company is selected based on deliberate choices aimed at achieving solid returns and supporting a livable world. As part of managing our ESG index portfolio, we also evaluate BlackRock as an external asset manager. Following this review, we decided to end our relationship with BlackRock.”
PME Pensioenfonds pulled approximately €5 billion in assets under management from BlackRock. This follows the withdrawal of €14 billion from another Dutch pension fund back in September. BlackRock finds itself in a difficult spot. Pro and anti-ESG investors are at odds, and BlackRock is caught in the middle. While anti-ESG has been the loudest over the past several years, this marks another instance of pro-ESG investors pushing back.
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