ESG isn’t just BlackRock’s fight

Share

Why ESG Will Become A Top Priority Among Wealthy Investors 1
Share

It would be easy — if perhaps reductive — to label the fight over environmental, social, and governance investment in the finance sector as “Big Oil v. BlackRock.”

Take a look at this week’s headlines, though, and you’ll find the world’s largest asset manager pitted against the chairman of the Texas State Board of Education — who is also the CEO of a company that patrols oilfields by air.

“BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF,” Aaron Kinsey, the oil aviation CEO-cum-education board chair, wrote in a letter posted on X.

PSF refers to the Texas Permanent School Fund, which announced Tuesday it would divest, as of April 30, $8.5 billion from BlackRock, which it had enlisted as an asset manager. BlackRock, since 2022, however, has held a spot on a list of companies Texas’ comptroller deems to be boycotting fossil fuels. A 2021 Texas law requires state pension funds to divest from companies on that list.

“BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans,” Kinsey wrote. “The PSF will not stand idle as our financial future is attacked by Wall Street.”

BlackRock Vice Chair Mark McCombe, in a letter Thursday to Kinsey, asserted that the asset manager had generated $250 million for Texas’ PSF since 2006, noting that BlackRock has invested $120 billion in Texas-based public energy companies.

“We urge you to reconsider your decision and prioritize Texas schools and families who have benefited from BlackRock’s consistent, long-term investment out-performance,” McCombe wrote in the letter, seen by Reuters and Bloomberg. “Your actions put short-term politics over your long-term fiduciary responsibilities.”

If anything, finance companies this year have shown a willingness to step back and analyze their commitments to ESG.

JPMorgan Asset Management and State Street Global Advisors last month confirmed they were leaving Climate Action 100+, an investor group that advocates curbing the carbon footprint of the world’s largest corporate greenhouse gas emitters. BlackRock, meanwhile, said it would remain a member of that coalition but would transfer its participation to a smaller international arm.

This week, no fewer than five big banks made public comments that perhaps show the finance sphere is taking its foot off the gas with regard to ESG – and not in the way that would reduce emissions.

Like BlackRock’s McCombe, Barclays CEO C.S. Venkatakrishnan said sustainability efforts are finding a foil in political polarization.

“We are standing on the brink of a transformative era in the drive toward a net-zero economy,” Venkatakrishnan said Tuesday at an ESG conference, according to Bloomberg. “You already are seeing in the world signs of a wavering strength of commitment. … People are still committed, but we feel like we go forward and we go a little backward.”

UBS CEO Sergio Ermotti told a separate conference Thursday that finance “is an attractive target for policymakers” who want to “divert at least some of the blame of unpopular decisions to banks.”

“Banks should not be forced to take decisions on behalf of policymakers: We are part of the private sector and we need to represent and protect the interest of our diversified clients,” he said, according to Bloomberg. “While we are not comfortable taking on the role of standard setters for all economic actors or the climate police on behalf of authorities, we are confident in our duties as financial risk managers.”

This mirrors comments Ermotti made in January to the World Economic Forum in Davos, Switzerland.

“Trying to enforce a political agenda through a regulatory regime without having a public and democratic debate about it is wrong,” he said, according to Bloomberg. “We can help, we can advise, we can sustain but we should not be seen as the driver of those debates.”

A spate of Canadian banks, meanwhile, showed an unclear connection between ESG commitments and planet-affecting end results.

Scotiabank disclosed that, at the near-halfway point of its effort to put C$350 billion toward climate-related finance by 2030, it has invested C$132 billion — but that climate-related projects “may — or may not — lead to reductions in overall emissions,” Reuters reported.

TD, meanwhile, said the greenhouse gas emissions impact of its business activities cannot be “reliably measured at this time.” And the Canadian Imperial Bank of Commerce said “sustainable financing may involve eligible green activities … but [does] not necessarily curtail the growth of their absolute emissions,” according to Reuters.

“The question for regulators will be whether it’s enough for the banks to insert these brief disclaimers deep in their ESG reporting or whether they need to do a better job telling their investors and the public that these huge financial numbers they promote as green aren’t necessarily adding up to emissions reductions at all,” Matt Price, executive director of Investors for Paris Compliance, told the wire service.

Perhaps most telling, Morgan Stanley’s asset-management arm plans to raise at least $1 billion for a new fund dedicated to energy-transition bets, people familiar with the matter told Bloomberg this week.

On its surface, this might be taken to mean that banks are more comfortable letting clients gamble on a will-they-or-won’t-they-transition rather than actually doing the work.

Then again, maybe Ermotti’s comments are worth reviewing, and banks need to ask whose fight this is, and what are the boundaries of a bank’s responsibility.

BlackRock’s McCombe appeared to frame his argument that way in his letter to Kinsey.

“Ending a long, successful partnership that has been a positive force for thousands of Texas schools and families in such a reckless manner is irresponsible,” he wrote. “How our clients invest and whom they entrust to manage their money is entirely their decision, but we feel an action of this magnitude warrants transparency and consensus — not political-driven decision-making.”

Share

Latest

Related Content

Krzysztof Bratos

Managing Director – Head of Investment Division Private Banking, Wealth Management Brokerage House and Retail Investments
mBank S.A.

Indonesia, Jakarta

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

COVID-19
Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

Request Nomination Pack

Error: Contact form not found.

Contact Us

    Data Protection

    The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

    Philippines, Manila

    Thailand, Bangkok

    The Digital Banker Summit

    Moving on from FTX: is 2023 the year of CBDCs?

    Louisa Nicholls

    Head of Digital Experience and Design
    Coutts

    Media Kit

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Izaskun Azaldegui

      Head of Wealth Management in San Sebastián
      CA Indosuez Wealth Management

      I´m Izaskun Azaldegui Alba, a seasoned professional with extensive experience in banking and wealth management.  With over two decades of experience I´ve taken on various managerial roles, demonstrating my leadership abilities and expertise in private banking.  From leading teams effectively to achieving top positions within major national and international financial institutions, my career journey reflects my commitment to excellence and continuous growth in dynamic environments.

      My educational background is comprehensive, including a Master´s degree in Business Administration by Deusto University, certifications, and specialized programs in finance, coaching and management.  Notably, I´ve completed the Executive Program for Women in Senior Management and obtained a Professional Coach Certification, enhancing my leadership and mentoring capabilities.

      My proficiency in multiple languages, including English, French, Basque and a little German has been instrumental in navigating diverse professional environments and building strong relationships with clients and colleagues worldwide.  Moreover, my international experience, particularly in France and the USA, has broadened my perspective and enriched my cultural understanding.

      Edmund Shing, PhD

      Global Chief Investment Officer
      BNP Paribas Wealth Management

      Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

      Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

      Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

      Aurélie Maillard

      Head of Private Markets
      Société Générale Private Banking Europe

      Aurélie Maillard started her career in 2014 at Banque Privée 1818 (now Natixis Wealth Management) as a banker in charge of business development for the wealth management offering of the regional Caisses d’Epargne. She then joined Flexstone Partners (a subsidiary of Natixis IM) in 2017, first in Paris and then in Geneva, as Vice President in the Investor Relations and Business Development team.

      Aurélie Maillard joined Societe Generale in Geneva in July 2022 as Head of Private Markets for Societe Generale Private Banking Europe.

      After obtaining a Bachelor’s degree in Law from Sheffield Hallam University in the UK, Aurélie Maillard continued her legal studies in France with a Master’s degree in Business Law from UPEC and a Master’s degree in Wealth Law, Notary Track, from the University Jean Moulin Lyon 3. She is also a graduate of the Grande École programme (Master of Science in Management) of EM Lyon Business School.

      Tara Palmer

      Chief Operating Officer            
      SG Kleinwort Hambros

      Andrew Yen

      Founder
      Panhe Family Office

      Ph. D. in Chinese finance, Master of Financial Engineering, CFP Holder in Taiwan and China, formerly with UBS and UBSS, he has served as an independent director of Shandong International Trust Co., Ltd.(1697.HK), an expert lecturer in the senior management class of the Tsinghua University School of Law China Trust Industry Association, and a Special Lecturer in the CPB Certification Course for internationally certified private bankers. Dr Yen has 25 years of practical experience in the family office (Chinese mainland, the US, Singapore, Hong Kong, Taiwan, Vietnam, Thailand, Malaysia, etc.) , have a deep understanding of the practical problems and obstacles faced by entrepreneurs in Greater China. Dr Yen has also been invited to teach and share on topics related to heritage at China Europe International Business School, Taiwan University, Peking University and Zhejiang University universities.

      Dr. Yen founded the Panhe Family Office in 2013,focuses on family wealth preservation and nheritance, and ticks to the strategy of “buyer” positioning. With taking “Defend, Attack and nheritance” as the main line, he first nitiated “top ten service modules” of family office industry. incubating family SFO methodology and assisting business families to carry out succession project and construct family governance system. Over the years, Dr. Yen has served nearly 300 families in Greater China by combining theory with action. The Panhe Family Office entered into a strategic partnership with the Rockefeller family office in 2018.

      Kaie-Liis Asu

      Head of Private Banking
      LHV Pank

      Request Nomination Pack

      Error: Contact form not found.