US-based foundation severs ties with BlackRock
The Sierra Club Foundation has announced its decision to divest from BlackRock/Aperio in order to “safeguard its assets”, citing the asset manager’s failure to address “the systemic financial implications of the climate crisis” through its investment decisions.
The US-based Sierra Club Foundation, which oversees the charitable activities of campaign group Sierra Club and manages a $200m portfolio, stated that its decision follows three years of engagement with BlackRock. In May 2022, it formally placed the $11.6trn asset manager “on watch” for not meeting the Foundation’s expectations as a client. It is reported that the Foundation had invested $10.5m in BlackRock funds.
Instead, the Foundation will transfer its assets to women-led impact investment firm Nia Impact Capital and Xponance, a Black-founded and majority-Black-owned multi-strategy investment firm. Both managers are focused on sustainable investing and provide proxy voting options aligned with climate and decarbonisation goals.
The Foundation stated that its decision to replace BlackRock reflects ongoing concerns about the firm’s promotion of a “dangerous all-of-the-above energy strategy that is accelerating the climate crisis and putting its clients’ investments at risk”.
This announcement follows a broader trend of backlash against the stewardship record of some of the world's largest asset managers. The asset manager recently cut its support for shareholder proposals related to environmental and social issues to 4.1%, and in January withdrew from the Net Zero Asset Managers Initiative (NZAMI).
“BlackRock has refused to fulfil its fiduciary duty to long-term investors and support real-world decarbonisation through stronger stewardship practices, which is why it is no longer a responsible manager for the Sierra Club Foundation’s assets,” said Paul Rissman, a board member of the Foundation.
“Climate risk is financial risk,” he added.
The move makes the Sierra Club Foundation the first US-based asset owner to formally sever ties with BlackRock over climate concerns. It is also the first globally to divest from the manager in the wake of similar action against State Street. Notably, UK-based People’s Pension withdrew £28bn from State Street in February, followed by Danish fund AkademikerPension in March.
A spokesperson for BlackRock commented on the news: “We support clients that have made net zero commitments for their organisations through our industry leading sustainable and transition investment platform, research, and analytics. We also offer Voting Choice for eligible clients. Reflecting how this resonates with our clients, they have entrusted us with more than $1 trillion of sustainable and transition assets to manage on their behalf."
