US House panel finds BlackRock and other asset managers reluctant to join climate initiative
According to a report published on Friday by the Republican-led U.S. Congress committee, top asset managers in the United States were concerned that signing up for an industry climate initiative would make them look like they worked too closely together and attract regulatory scrutiny. This is the latest report released by the U.S. House Judiciary Committee’s Republican majority in a probe that they claim has revealed fund firms and activists were part of a “climate cartel” which colluded through shareholder organizations to reduce emissions. Democrats on the committee have denied these allegations.
Top fund firms deny wrongdoing. However, the material cited by the report indicates that they were always concerned about appearing to be too cozy with shareholder organizations engaged in climate activism.
BlackRock's 2019 view was "We don't engage in collective action." The report cites an email summary obtained by the committee of a meeting between unidentified BlackRock executives and Ceres, an environmental advocacy group based in Boston.
State Street, too, expressed concerns about "collusion", if it were to join Ceres' effort to pressure companies to reduce emissions, known as Climate Action 100+ or CA100+. The report says that the firm was concerned about "the perception of voting or engaging as a bloc" if it joined a Ceres-backed effort to press companies to cut emissions known as the Climate Action 100+, or CA100+. BlackRock declined comment. State Street declined to comment. Both joined the CA100+ but resigned earlier this year citing concerns about independence, while the group was seeking members to take more aggressive actions.
Republican officials from oil-producing states have taken issue with investors who coordinate to pressure management of corporations on climate issues, at the expense corporate growth and returns. Last month, Republican attorneys general of 11 states filed a lawsuit against BlackRock, State Street, and Vanguard claiming that their climate activism had reduced coal production and increased energy prices. These firms manage a combined $26 trillion. Vanguard declined to comment, whereas State Street and BlackRock denied any wrongdoing. Donald Trump, the U.S. president-elect, campaigned against Joe Biden's climate change initiatives and promised to increase U.S. production of oil and gas. Theoretically, Trump's administration can follow up the findings of the congressional committee.
A spokesperson from the committee declined comment on any talks it might have had, if they did, with current or future governments. In a section of the report, the committee describes how top fund firms helped to elect dissident Exxon directors in 2021 under pressure from activists such as Ceres.
Ceres issued a statement saying: "The claims made in the U.S. House Judiciary Committee Report are completely false." Climate Action 100+ has never controlled how shareholders voted.
Ceres stated that the dissidents directors were overwhelmingly reelected each year, a result which was "completely inconsistent" with the claim they were a hostile influence in the company.
(source: Reuters)
