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BlackRock Faces Blue America Backlash From NYC Comptroller

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(Bloomberg) -- Red America complains BlackRock Inc. is too green. Now blue America is complaining it’s not green enough.

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In another sign of how the nation’s fractious politics are intruding even on Wall Street, the comptroller of New York City warned in a Sept. 21 letter to BlackRock Chief Executive Officer Larry Fink that he was “re-assessing” the Big Apple’s business with BlackRock, the world’s largest asset management company. The reason: BlackRock “abdicates responsibility” in not pushing corporations to do more to combat global warming.

New York City Comptroller Brad Lander said he’s become increasingly concerned that the firm, which manages $43 billion for three of the city’s pension plans, is backtracking on its commitment to reduce carbon emissions. BlackRock declined to comment.

BlackRock’s advocacy of investing with environmental, social and governance, or ESG, goals has drawn fierce criticism this year from environmental advocates, who say the firm isn’t doing enough. That view stands in sharp relief to that of Republican politicians across the country, who say the company is harming state economies and fossil fuel interests.

In Texas, some conservative lawmakers are seeking to steer money away from BlackRock and other firms they deem harmful to oil and gas companies.

BlackRock is the largest asset manager for three big NYC public pensions, managing about a quarter of their investments, according to Lander.

In the letter, Lander also took issue with BlackRock’s recent efforts to tout its investments in oil and gas in response to Republicans, who have criticized the firm for its advocacy of sustainable investing.

“The fundamental contradiction between BlackRock’s statements and actions is alarming,” Lander wrote in the letter. “BlackRock must demonstrate a plan to use its position as the world’s largest asset manager, with all the corporate governance responsibilities that go along with that position, to move its portfolio companies to get their businesses in line with a net-zero economy.”

Lander asked BlackRock to publish a plan showing how it will achieve net-zero across its entire portfolio, show how it will work toward phasing out high-emitting assets and provide more transparency about how it engages with companies in which it invests.

“BlackRock, as the world’s largest asset manager, must begin to lead in deeds, not simply words,” Lander said. “We will be prudently reassessing our business relationships with all of our asset managers, including BlackRock, through the lens of our climate responsibilities.”

BlackRock has defended its backing of sustainable investing, saying that climate change is a top concern for its clients and a key risk to consider in financial decisions.

“Investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes,” Dalia Blass, BlackRock’s head of external affairs, said in a letter earlier this month in response to 19 Republican state attorneys general. “These opportunities cut across the political spectrum.”

An ABC on ESG and the Kinds of Backlash It’s Facing: QuickTake

(Updates with BlackRock declining to comment in third paragraph and adds context throughout.)

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