WHEREAS: There is increasing misalignment between clients’ interests and BlackRock’s climate stewardship.
A growing number of BlackRock clients are calling for real-world decarbonization:
BlackRock has stated that climate change is its clients’ highest priority issue[1] and “a rapidly growing share” have “already committed to net-zero aligned portfolios."[2]Clients including New York City pension funds, the Government Pension Fund of Japan (the world’s largest), and Seattle City Employees Retirement System have withdrawn or threatened to withdraw funds over concerns that BlackRock inadequately manages sustainability risks. Real economy decarbonization is a stated goal of Paris Aligned Asset Owners, Net Zero Asset Owners Alliance, Climate Action 100+ (which BlackRock is a member of), and U.N. Principles for Responsible Investment (UNPRI) Active Ownership 2.0. BlackRock’s existing and potential clients include their signatories.Without additional climate mitigation efforts, BlackRock estimates losses to the global economy of up to 25%[3] by mid-century. This will devastate long-term portfolio returns. Real-world decarbonization will help mitigate these risks to long-term and broadly diversified investors, who are disproportionately exposed to market performance.
90% of BlackRock’s equity portfolio is held in index-tracking passive funds, which cannot mitigate risk via portfolio construction.[4]BlackRock’s pensions business constitutes 30% of total assets under management (AUM).[5] Pensions have a duty of impartiality that requires protection of long-term plan viability and future distributions.BlackRock’s 2023 10-K acknowledges that reputational perception regarding climate impacts could increase company costs, and that climate risks could have adverse impact on clients’ investments or reduce AUM, revenue, or earnings. 
Yet, BlackRock has explicitly stated that its role is “not to engineer a specific decarbonization outcome in the economy,” a position arguably at odds with BlackRock’s own assertions:
“Climate risk is investment risk”[6]Investors “have a meaningful role to play” in transitioning to a low-carbon economy[7]“We have a responsibility to engage with companies to understand if they are adequately…managing sustainability-related risks, and to hold them to account…if they are not.”[8]An “orderly [energy] transition would result in higher economic growth…and would create a more constructive macro environment for financial returns for our clients.”[9]In 2020, BlackRock committed to strengthen its stewardship activities[10] as an essential part of its investment approach, yet BlackRock focuses on portfolio companies’ governance and disclosures, and its voting choice program. Generalized governance concerns don’t necessarily address decarbonization. UNPRI, of which BlackRock is a member, notes that corporate disclosures are not sufficient to deliver outcomes.[11] And client choice is not stewardship.

[1] https://www.blackrock.com/corporate/investor-relations/2021-larry-fink-ceo-letter
[2] https://www.blackrock.com/corporate/sustainability/2030-net-zero-statement
[3] https://www.blackrock.com/us/individual/insights/blackrock-investment-institute/investing-in-climate-awareness
[4] https://www.blackrock.com/corporate/literature/publication/annual-stewardship-report-2022.pdf
[5] https://s24.q4cdn.com/856567660/files/doc_financials/2023/ar/BLK_AR22.pdf
[6] https://www.blackrock.com/corporate/investor-relations/2020-larry-fink-ceo-letter
[7] https://www.blackrock.com/corporate/investor-relations/2020-larry-fink-ceo-letter
[8] https://www.blackrock.com/corporate/investor-relations/2020-blackrock-client-letter
[9] https://www.blackrock.com/corporate/literature/publication/annual-stewardship-report-2022.pdf
[10] https://www.blackrock.com/corporate/investor-relations/2020-blackrock-client-letter
[11] https://www.unpri.org/download?ac=9721