IEEFA: BlackRock Assets at Risk After Fossil Fuel Investments

Investment management company BlackRock is facing great risks and its clients’ assets as it continues to invest in fossil-fuel firms. Al Jazeera said that the United States-based firm stays disregardful of the bleak possibilities tied to its billion-dollar investments in companies that rely on fossil fuels.

BlackRock is known as the biggest fund management firm across the globe, managing assets amounting to about $6.5 trillion. However, a report by the Institute for Energy Economics and Financial Analysis (IEEFA) revealed that this move has resulted in more than $90 billion in losses in the last 10 years.

This billion-dollar loss came in the form of wealth and opportunity costs. About 75% of the loss is attributable to BlackRock’s venture in fossil fuel-related companies such as Chevron Corp, BP Plc, ExxonMobil and Royal Dutch Shell Plc.

According to the report cited by Al Jazeera, the financial management company has the option to focus on its passively managed portfolio, valued at $4.3 trillion.

The IEEFA study also remarked that BlackRock’s key competitors have been delving into “low-carbon investing strategies,” which result in lower-risk and sustainable, yet cost-effective investments.

IEEFA report co-author Tim Buckley criticized BlackRock’s lack of initiative, saying that the company is “talking the talk” but lacks action consistent with its pronouncements. In addition, Buckley also said that the firm pretends to have limited control when it comes to making a change, but the truth says otherwise.

The financial management company released a statement saying that its holdings are channelled via index-based exchange-traded funds and other index-related products. This means that it merely aims to reproduce the index’s performance. It also emphasized that it does not exclude firms based on BlackRock’s perspective.

The rebuttal lambasted IEEFA’s report saying that it is “misplaced” and “meaningless.”