Investment giant BlackRock failed the first test of its promise to hold companies responsible for addressing the climate crisis through their business plans when it voted to support the current chair of the Wells Fargo Bank, one of the world’s biggest investors in new fossil fuel infrastructure, campaigners at #BlackRocksBigProblem said yesterday.
BlackRock has been under intensifying pressure to make good on its climate commitments, ever since CEO Larry Fink emphasized climate risk and fossil divestment in his January 2020 letter to shareholders. The mammoth investment house’s performance since has been mixed. It has excluded tar sands/oil sands and thermal coal projects from its sustainable investment funds. But it also facilitated private financing for Alberta’s “reckless” and, ultimately, unsuccessful taxpayer subsidy for the Keystone XL pipeline. It called out 53 companies as climate laggards while failing to follow through on its own key shareholder votes. And it sustained withering criticism last month from a former senior investment officer who said his experience at BlackRock convinced him sustainable investing is a “deadly distraction” from government action.
At the Wells Fargo annual general meeting, BlackRock missed a key opportunity to take action on its stated principles, BlackRock’s Big Problem says.
“In January 2021, BlackRock expanded its voting criteria and announced that it would hold directors accountable when their companies fail to address climate change in their business plans,” the campaign explains. After that, advocates “specifically called on BlackRock to vote against Wells Fargo Chairman Charles H. Noski for failing to implement plans consistent with limiting global warming to 1.5ºC. Under Noski’s leadership, Wells Fargo has poured US$223 billion into fossil fuel industries in just the last five years.”
But yesterday morning, Noski was re-elected with at least 94% of the vote, making it “highly improbable” that BlackRock tried to take him down, the campaign says. BlackRock owns 7% of Wells Fargo stock, making it the company’s second-biggest shareholder after another big investment fund, Vanguard, which holds 7.6%.
The more than 20 non-government organizations behind BlackRock’s Big Problem were distinctly unimpressed.
“Today, BlackRock and Vanguard faced a major test on climate, and they failed,” said Jason Opeña Disterhoft, senior campaigner at Rainforest Action Network Climate. “They endorsed the management of the world’s #3 fossil bank, and #1 fracking bank, with the weakest coal exit policy among its U.S. peers. By giving a thumbs up to Wells Fargo’s record on fossil fuels, BlackRock and Vanguard have shown how low a bar they’re setting for climate action.”
“BlackRock had a chance to show us it was serious about its commitments to tackle climate change,” said Climate Finance Action co-founder Mary Cerulli. “Instead, BlackRock chose business as usual at one of the world’s biggest fossil fuel banks.”
“Wells Fargo has fallen significantly behind the curve when it comes to meeting the moment on climate action, and today it falls even further,” said U.S. Sierra Club campaign manager Ben Cushing. And “BlackRock and Vanguard did not live up to their rhetoric on climate action. We will be monitoring other pivotal shareholder votes closely and hope to see the largest investors step up to hold corporations accountable for their climate failures.”