In a further unraveling of Wall Street’s commitment to climate coalitions, BlackRock, the world’s largest asset manager, announced its withdrawal from the Net Zero Asset Managers initiative. This move, reported by The Wall Street Journal, marks a continuation of major financial institutions stepping back from environmental, social and governance (ESG) initiatives due to escalating political and legal challenges.
BlackRock’s exit from the United Nations-backed climate initiative is notable, given the firm’s high-profile history with ESG investing. The Journal noted that Larry Fink, BlackRock’s chief executive, had once declared that “climate risk is investment risk” and advocated for companies to align their strategies with a net-zero emissions economy. However, as political opposition intensified, BlackRock’s rhetoric softened.
BlackRock’s decision comes amid a wave of similar withdrawals by major U.S. banks and asset manager. Competitors such as Vanguard Group left the same climate coalition in late 2022, and U.S. megabanks including Morgan Stanley, Citigroup, and Bank of America recently exited the Net-Zero Banking Alliance (NZBA). These retreats coincide with the political resurgence of climate change skepticism, particularly following the election of Donald Trump to a second term as U.S. president.
The Journal highlighted lawsuits and investigations initiated by conservative states like Texas and Oklahoma, which accused BlackRock and other institutions of violating fiduciary duties through participation in climate initiatives. Such legal challenges, combined with a shifting regulatory environment, have pushed many financial firms to distance themselves from ESG-related commitments.