Did BlackRock Lose $90 Billion of Client Money on Fossil Fuels

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It depends on how one defines opportunity costs and if you cherry pick data… But “Big Oil” might be to blame

The Institute for Energy Economics and Financial Analysis (IEFFA) has called out the world’s top money manager by assets.

According to an IEFFA report, BlackRock reportedly lost clients an estimated $90 billion in over a decade on fossil fuel investments.

The report, published Aug. 1, alleges that the BlackRock lost the largely by opportunity costs. The report calls the firm out for “value destruction” and claims that instead of putting money in fossil fuel giants, the firm could have earned clients more money in renewable projects.

The report focuses the bulk of its argument on the underperformance of large multinational oil giants Exxon Mobil, Chevron, Royal Dutch Shell, and BP.

IEEFA argues that 75% of that $90 billion lost centered only on those four multinational companies, which have underperformed over the last 10 years.

The report also cites large losses in General Electric and the bankruptcy of coal miner Peabody.

The report calls on BlackRock to divest from fossil fuels and allocate more capital to renewable energy projects.

BlackRock Dismisses Report from the Institute for Energy Economics and Financial Analysis

A BlackRock spokesman told Dow Jones that the report’s assertions are “misplaced.”

A spokesperson for Blackrock, which managed $6.84 trillion in June 2019, said the firm focuses more on passive investments. Active management accounts for roughly 27% of its business, the firm claims.

The company also noted that it manages more than $50 billion in ESG strategies. According to the numbers, ESG strategies comprise 0.8% of the firm’s total fund allocations.

Finally, this isn’t the first time that critics charged BlackRock with failure to “walk the talk” on renewable energy.

For example, we reported in June that the London School of Economics alleged BlackRock blocked 14 and backed two climate resolutions at oil and gas company shareholder meetings between 2016 and 2017.

In addition, certain BlackRock environmental ETFs invested in Peabody Energy and Kinder Morgan.

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