BlackRock is vocal about the world's need to transition to a carbon-free economy, and the world's largest money manager has pushed its portfolio companies to set targets for reaching a zero-emissions world.
But the investment manager, which holds about $10 trillion in client funds, has also been touting its fossil fuel credentials in Texas, where it faces heat from politicians and the state's powerful oil and gas industries.
"We will continue to invest in and support fossil fuel companies, including Texas fossil fuel companies," BlackRock wrote in a January letter. The memo, addressed "To whom it may concern," was sent to Texas officials and local trade groups, a BlackRock spokesperson said.
"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," said the letter, signed by Dalia Blass, BlackRock's head of external affairs. It goes on to tout the company's fossil fuel holdings and projects it has funded, including gas pipelines, a carbon-capture pipeline and an oil exploration company.
BlackRock holds stakes of about 9% in Philips 66 and Occidental Petroleum; 8% in Valero Energy and ConocoPhillips; and 6% in ExxonMobil, according to the letter. Overall, the money manager has nearly $260 billion invested in fossil fuel companies around the world, including $91 billion in Texas.
Such figures aren't new. But they highlight the conflicts inherent in a financial landscape where bellwethers like BlackRock — which has long touted its environmental credentials — at once try to respond to investor pressure to fight global warming while continuing to direct billions toward companies that are raising the temperature.
BlackRock, Vanguard and State Street are among many investment companies who have asked portfolio companies to lay out their plans for meeting zero-emissions targets.
"For large universal investors, including investors like BlackRock, divestment is not an option," said Kirsten Spalding, senior program director of the Ceres Investor Network, which advocates for sustainable investment practices. "You can't construct robust portfolios without an energy company. So they've got to transform those companies, for sure."
Backlash from states big on fossil fuels
Texas is planning to withdraw state pension funds from companies that "boycott" oil and gas, and Lieutenant Governor Dan Patrick has called for BlackRock to be put at the top of that list.
"Texas will not do business with those that boycott fossil fuels," Patrick said in a letter last month to Comptroller Glenn Hegar. Patrick accused BlackRock of "capriciously discriminating" against oil and gas companies and said that its policies for portfolio companies to reach net-zero goals, as well as its role in electing climate-friendly directors to Exxon's board, amounted to a boycott of oil and gas.
Last month, West Virginia also said it would no longer use BlackRock to manage its operating funds. The revolt has led BlackRock CEO Larry Fink to court oil and gas companies. He has met with a dozen fossil fuel executives this year, and BlackRock has held meetings with Texas oil and gas trade groups and state officials, Bloomberg reported.
"BlackRock does not pursue divestment from oil and gas companies as a policy," Fink said in his annual letter to CEOs last month. At the same time, he wrote that climate change, and the technological changes needed to minimize its effects, would demand huge changes by every company and industry, and pushed CEOs to be ready.
"What Fink has said for a couple years is that they intend to address climate change through engagement. They will make an approach to reducing emissions across every sector, but they've also said it doesn't mean they're going to get rid of all the fossil fuels in their portfolio," said Kirsten Spalding, senior program director of the Ceres Investor Network, which advocates for sustainable investment practices.
"That does not seem like a radical change — it seems like their reality," she said.
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