The Dutch technology industry scheme PME is considering ditching BlackRock as its asset manager because of the firm’s “retreat from responsible and sustainable investing,” it said in an internal document seen by IPE.
PME has appointed BlackRock as the asset manager for a money market fund and several index portfolios, with a total value of approximately €5bn. The pension fund, which has a total of €60bn in assets under management, has made efforts in recent years to make its portfolio more sustainable, for example by divesting from fossil fuel stocks and switching to a more concentrated portfolio.
In the internal document, PME noted that it has grown increasingly uncomfortable by BlackRock moving “in the opposite direction […] as evidenced by the withdrawal of its main entity from the Climate Action 100+ initiative and its recent exit from the Net Zero Asset Manager initiative (NZAM)”.
“To achieve its climate goals, PME, alongside [its fiduciary manager] MN, relies on the efforts of organisations like Climate Action 100+ and Net Zero initiatives. The departure of major players like BlackRock from these organisations severely weakens them and could potentially lead to the termination of these initiatives,” PME added. “This also undermines our engagement leverage on the energy transition.”
Earlier this week, PME sent a letter to BlackRock’s Netherlands branch inviting it to enter “a dialogue to understand BlackRock’s perspective”. Depending on the outcome of this conversation, PME will decide whether to ditch BlackRock, a decision which it believes can be implemented in a “cost-neutral way” and would not affect returns.
Asked to comment on PME’s step, BlackRock said its departure from climate initiatives does not impact the way BlackRock manages portfolios for its clients.
Similarly, AP7, the largest of Sweden’s hefty national pension funds, has indicated that implications of BlackRock’s decision to quit the NZAM initiative could affect whether it renews the estimated €28bn of its investment mandates the world’s largest asset manager currently runs.
Fossil Free
PME’s public criticism of BlackRock coincides with the start of a campaign by the Dutch branch of Fossil Free asking pension funds to ditch BlackRock.
Fossil Free NL said it started the campaign because BlackRock remains a very large investor in fossil fuels.
According to a survey by German NGO Urgewald, the firm’s fossil investments total $400bn (€385bn). This would make it the second-largest investor in fossil fuels globally with only Vanguard, another US asset manager, investing a higher amount in the industry, according to Urgewald.
Fossil Free NL’s campaign (#BreakWithBlackRock) is initially aimed at BlackRock because it is the manager most pension funds work with, according to Hiske Arts of Fossil Free NL.
“But our call also extends to Vanguard and State Street,” Arts told IPE. “In general, we want pension funds to come up with stricter criteria for their cooperation with asset managers. If you have decided to stop investing in fossil, it is not logical to still work with asset managers who continue allowing money to flow into fossil fuels.”
Disappointed
Besides PME, other BlackRock clients that no longer invest in fossil include ABP, PFZW, hospitality sector fund Horeca & Catering and the pension fund for doctors. These funds are disappointed that BlackRock has left the NZAM initiative, but do not as yet attach any direct consequences to this.
“We are convinced that cooperation by financial entities contributes to solutions for the climate problem, and leaving NZAM obviously does not help,” said a spokesperson for PFZW.
She added that PFZW is “obviously having discussions” with BlackRock on the matter.
Horeca & Catering also has contacted BlackRock following its departure from NZAM, a spokesperson told IPE.
BlackRock invests 16% of the hospitality fund’s total invested assets (around €15bn). The fund is, however, not currently considering terminating its contract with BlackRock, according to the spokesperson.
“This is because the investments BlackRock makes on our behalf fit into our climate policy, as the fund itself determines exclusions, votes and engagements,” the spokesperson said. “As a result, our fund continues to implement its own climate policy.”
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