BlackRock Faces New Criticism Over Fossil Fuels

But watch the money: BlackRock’s ESG ETF last month was the most successful fund launch in history

BlackRock fossil fuel investments have generated controversy.

The company faces a media storm for failing to put its money where its mouth is on climate change.

On the flip side, BlackRock’s iShares ESG MSCI USA Leaders ETF (SUSL) hoovered up $851 million when it launched last month. This fund invests in the best corporate citizens in the US as part of a responsible investing theme.

BlackRock fossil fuel investments

Critics point to certain BlackRock environmental ETFs that have invested in companies like Peabody Energy, a coal mining company, and Kinder Morgan, which is constructing the Trans Mountain pipeline.

An article by the London School of Economics alleges BlackRock blocked 14 and backed two climate resolutions at oil and gas company shareholder meetings between 2016 and 2017.

According to Boston-based consultancy Ceres, in 2018, BlackRock supported just 10% of climate-related proposals. As a result, investors have criticized BlackRock fossil fuel investments repeatedly in public.

But following the money…

BlackRock or not, ultimately the market is the great leveler.

In Q1 2019, net inflows into ESG grew by $26 billion. That figure comes from a report by Impactvesting, a New York-based consultancy.

Furthermore, climate-focused fund inflows touched a record $76 billion in 2018, and current trends show that 2019 might end with a 36% growth on this figure.

BlackRock’s own projections for ESG: By 2028, a fifth of all fund assets, or $400 billion, will be ESG-themed. That’s up from a mere 3% today.

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