ESG bad news! The "flag bearer" BlackRock has also withdrawn

Did Trump end ESG? "Flagbearer" BlackRock announces withdrawal from the "Net Zero Financial Alliance."

On Thursday, BlackRock, the world's largest asset management company, announced its withdrawal from the Net Zero Asset Managers initiative (NZAM). This follows the exits of the six largest U.S. banks and the world's second-largest asset manager from the net zero industry organization, marking another financial giant's departure.

According to reports, BlackRock Vice Chairman Philipp Hildebrand stated in a letter to institutional clients that joining NZAM "has caused confusion regarding BlackRock's business and has subjected us to legal inquiries from various public officials."

NZAM was established in 2020 with the aim of urging and assisting asset managers to achieve net zero greenhouse gas emissions by 2050.

Previously, BlackRock had become one of the most well-known advocates for ESG and sustainability, publicly committing that "companies that do not take proactive measures in carbon emissions will be excluded from our investment portfolios," with related assets under management reaching $1 trillion.

As Trump is set to take office as President of the United States, anti-ESG sentiments may rise again. Trump previously withdrew from the Paris Agreement during his last term and has repeatedly stated that climate change is "one of the greatest hoaxes ever."

Republican-led states, conservative groups, and some American businesses have frequently initiated anti-ESG movements in recent years.

Since BlackRock proposed the stance that "climate risk is investment risk" in 2020, the company has faced ongoing attacks from conservative politicians in the U.S. They have launched lawsuits, regulatory investigations, and boycott campaigns, accusing the company, which manages $11.5 trillion in assets, of using its significant holdings to promote climate activism and other forms of "woke capitalism."

At the end of last year, 11 Republican-led states sued BlackRock, Vanguard, and State Street, accusing them of colluding to restrict coal supply and advance a "destructive, politicized environmental agenda."

Federal banking and energy regulators have also initiated investigations to determine whether large asset management companies are fulfilling their regulatory obligations as passive investors.

In fact, BlackRock's shareholder proposal support rate for environmental and social issues has dropped from 47% in 2021 to 4% last year. Tracey Lewis, head of climate policy at the public citizen organization, believes:

"This withdrawal actually indicates that their statements in 2020 and 2021 were merely performance and marketing."

However, BlackRock emphasized in its letter that withdrawing from NZAM "will not change the way we develop products and solutions or manage investment portfolios. BlackRock's active portfolio managers will continue to assess significant climate-related risks, as well as other investment risks."