BlackRock’s Amazon oil ties undermine its climate change rhetoric
NGO report shows the asset manager holds billions in companies operating in one of the world's most carbon-rich, biodiverse regions
In March this year I wrote an article for US media outlet Mongabay echoing calls for the world’s largest asset manager, BlackRock, to respect indigenous peoples’ rights by adopting and implementing some kind of formal policy. The arguments were - and remain - various: BlackRock’s astonishing multi-trillion dollar size and reach, the companies it invests in, the routine way that indigenous peoples’ rights are violated, and, last but not least, the asset manager’s attempt to position itself as a financial leader on climate change, sustainability and going “net zero.”
“BlackRock is the largest investor in the industries driving the climate crisis and has often defined itself as Wall Street’s conscience,” I quoted Friends of the Earth-US’s Gaurav Madan. “It’s already putting itself out there as the guiding light on climate change and while the rhetoric has been encouraging, the reality has been disappointing. I don’t think they have a grasp at all of their responsibilities or their impact when it comes to respecting Indigenous peoples’ and local communities’ rights.”
That Mongabay article highlighted how research by US NGO Amazon Watch and a Brazilian indigenous federation, the Articulacao dos Povos Indígenas do Brasil (APIB), had found that BlackRock was “financially enabling at least nine companies directly or indirectly implicated in land grabbing and other abuses of Indigenous peoples’ land rights in the Amazon”, but since then Amazon Watch has published more research further exposing the gap between the asset manager’s climate change rhetoric and the reality of its holdings. According to a report last month, BlackRock, together with two of the world’s other largest asset managers, Vanguard and State Street, hold billions of dollars of “debt and equity investment in oil companies operating throughout the Amazon rainforest that cause Indigenous rights abuses, destroy the rainforest, and warm the climate.”
The figures are staggering. In total, Amazon Watch estimates that the investments of the “Big Three”, as they’re commonly known, are at least $46 billion, with BlackRock easily the most exposed and holding “$6 billion in debt and $24.2 billion in equities in oil companies currently operating in the Amazon rainforest, including $1.5 billion in combined debt and equity in the companies investigated in the report's case studies.”
Those case studies feature Chile’s ENAP and Ecuador’s PetroAmazonas operating in Ecuador, China’s CNPC and the London Stock Exchange-listed PetroTal operating in Peru, and Brazil’s Eneva holding a concession in that country. In total, Amazon Watch lists 24 oil companies active in the Amazon in which it claims that BlackRock has holdings, including the UK-based BP, France’s Total and Brazil’s Petrobras.
“Asset management companies have become silent partners in the exploitation of the rainforest by fossil fuel companies, and they are doing little to stop despite public claims to support the world’s transition to clean energy,” the report states. “CEO Larry Fink makes news every year with his communiques to clients and leaders of companies under BlackRock’s management. For the last two years, Fink has made climate change central to the company’s public strategy, including a commitment to divest from thermal coal production in actively managed funds. However, while BlackRock’s letters garner lots of attention, the fact remains that the company is still one of the world’s largest investors in fossil fuels.”
Of course, it’s one thing to publicly express concern about the climate while continuing to invest in oil companies, but another thing if those companies operate in the Amazon, one of the most carbon-rich and biodiverse regions on the planet, and another thing again if those holdings run into the billions and billions, not to mention any alleged violations of indigenous peoples’ rights. Doesn’t this make a mockery of BlackRock’s climate change and sustainability pretensions?
“BlackRock's holdings in both bonds and equities in oil companies operating in the Amazon certainly raises questions about the sincerity of its commitments regarding climate change, human rights and “natural capital,”” Amazon Watch’s Moira Birss tells me. “The only thing we've seen from them in the past few months is a minorly-improved record on shareholder votes as compared to last year, but given the scale of the deforestation and rights crisis in the Amazon, and of the global climate crisis, that is nowhere near sufficient.”
Lara Cuvelier, from the French NGO Reclaim Finance (RF), agrees that holdings in such companies undermine BlackRock’s rhetoric on climate change, arguing that, among other things, its policies are still far too vague. Earlier this year RF published two reports on the asset manager’s coal and “tar sands” holdings, with the first leading Cuvelier to conclude “it’s hard to see Larry Fink’s sustainability commitment [in early 2020] as anything other than greenwashing”, and the second to state that it “highlights the gap between BlackRock’s net-zero commitments and its own practices.” As for coal and tar sands, so too for Amazon oil.
“It was positive seeing BlackRock starting to talk more about climate and make announcements saying they would do more,” Cuvelier tells me. “For example, it was saying they would take voting action if companies weren’t going far enough on climate, which sounds great, but then when you look into the details. . . Is BlackRock actually defining what it means by a company not doing enough on climate? Is it defining the type of sanctions they’ll take if companies aren’t progressing? I think Amazon oil is another good example of why it needs very specific policies. Of course, we’re not saying BlackRock should divest from or vote against the entire oil and gas sector, but what we’re seeing is that even for the worst companies in these sectors BlackRock doesn’t have a specific or real plan to say, “If this company doesn’t stop developing or engaging in risky projects in the Amazon, or the Arctic, or underwater, or tar sands, then maybe, first, at the end of the year, we’ll vote against the management and then, the year after, we’ll divest.” We don’t have policies stating these rules. It’s not enough just to ask companies to adopt, eventually, net-zero plans.”
All around the world now 1,000s of people are calling on BlackRock to divest from its most destructive holdings. A global network of NGOs calling itself BlackRock’s Big Problem has sprung up - “big talk, little action” is its take on the company since CEO Fink publicly committed to change in early 2020 - and in May, ahead of the company’s Annual General Meeting, it organised a digital “People’s Assembly on BlackRock.” Prior to that in March, four days after my Mongabay article was published, more than 80 indigenous people and other grassroots activists from 27 countries wrote to Fink urging BlackRock “to stop financing companies that destroy the planet and violate communities’ rights.”
“As the world’s largest investor in fossil fuels and deforestation-linked agricultural commodities, your investments are tied to gross environmental and human rights violations: land grabbing and dispossession, increased deforestation and carbon emissions, and violence and criminalization,” the activists’ letter to Fink ran. “Climate change is not simply a risk to be calculated in terms of profit margins. It is a constant stream of risks to our peoples and our planet, which we face every day.”
According to Friends of the Earth-US’s Madan, BlackRock didn’t respond directly to that letter and hasn’t taken any “significant action” over the last few months.
“BlackRock’s sustained investments in fossil fuels and deforestation-linked industries cast serious doubts on its seriousness to match its rhetorical climate commitments,” Madan tells me. “The Wall Street giant should have a clear plan in place to divest from fossil fuels and halt its financing to some of the world’s worst companies that are cutting down globally-significant forests and driving violence against local communities. Everyone knows who these companies are. The question remains is BlackRock willing to take the necessary action to divest from fossil fuels and defund deforestation?”
BlackRock didn’t respond properly to me either, ignoring my questions and instead sending various tidbits on climate-related initiatives, including the somewhat misleading assertion that it “cannot selectively divest from individual companies in indexes” and a summary of a just-published report on its voting record on company shareholder meetings. “This proxy year we broadened our climate focus universe to over 1,000 companies,” wrote a BlackRock spokesperson summarising the report. “We had more than 2,300 engagements on climate & natural capital and voted against 319 companies, including voting against the (re)election of 255 directors, over climate-related concerns. We also supported 64% of the environmental shareholder proposals we voted on (46 out of 72).”
All that may be but, as so many people around the world are emphasising, it is nowhere near enough. BlackRock needs to get serious on climate change and sustainability now.