Energy investing: Setting the record straight

The energy industry plays a crucial role in the economy, and, on behalf of our clients, BlackRock has invested $225 billion in U.S. public energy companies.1 We are also partnering with energy companies and start-ups to fund new technology and innovations that will power the global economy, now and in the future.

Despite these investments, BlackRock has recently been accused of “boycotting” oil and gas companies.

We’re setting the record straight about our focus on energy investing, our responsibilities to clients and how we consider climate risk.

Hi, I’m Rich Kushel. Let's set the record straight on BlackRock’s approach to energy investing.

BlackRock is one of the leading energy investors in the world. Globally, on behalf of our clients, we’ve invested over $320 billion in public energy companies2, including investments in both traditional energy sectors like oil and gas and in renewables – we also invest in projects like pipelines, power generation facilities, and new technologies and innovations that will help power the global economy, now and in the future. And in private markets, we’re investing on behalf of our clients in energy infrastructure projects around the world – including a 1,500-mile long pipeline system for carbon capture in the US, a natural gas pipeline connecting the Permian with a gulf-coast hub, a battery system in Australia which we expect to be the single largest grid scale battery in the world, and the largest onshore wind farm in Africa.

Across all these investments, our core focus is seeking the best financial outcomes consistent with our clients’ investment objectives. BlackRock and our clients cannot be successful unless the companies we invest in, on behalf of our clients, are also successful.

One of BlackRock’s most critical tasks as a fiduciary investor for our clients is to identify short- and long-term trends in the global economy that might affect their investments. We do this across all sectors – including energy – and we evaluate all kinds of long-term investment risks that could impact portfolios.

One such trend is the changes in government policies, technology, and consumer preferences shaping the transition to a low-carbon economy. Our job as a fiduciary to our clients is to think through the risks and opportunities these changes will have on their investments.

Our investment view is carbon-intensive companies will continue to play a crucial role in the economy for the foreseeable future, under any plausible transition path, alongside investments in new energy technologies and steps to mitigate methane and carbon emissions – all of which will create new investment opportunities for our clients.

Ultimately, the choice of where to invest rests with our clients. As a fiduciary, we offer our clients choice to help them reach their investment goals, we seek the best risk-adjusted returns with our mandates our clients give us, and we underpin our work with research, data, and analytics.

Our clients’ interests come first.

This material does not constitute investment advice. Investing involves risks, including possible loss of principal.

2 Source: BlackRock, as of 4/24/23. “Energy companies” refers to corporations classified as belonging to the GICS-1 Energy Sector. For more information, visit https://www.blackrock.com/corporate/newsroom/settingthe-record-straight © 2023 BlackRock, Inc. All rights reserved.

Energy Investing at BlackRock

As an investor in both traditional and renewable energy around the world, we put our clients first by offering a wide variety of choice and seeking investment outcomes that match their objectives. Watch as Rich Kushel, Head of our Portfolio Management Group, sets the record straight on BlackRock and energy investing.

We are helping 35 million Americans achieve their investment goals

We are proud of the role we play in helping millions of Americans achieve their investment goals and financial well-being in retirement.2 Our priority is fulfilling our commitment to our clients’ financial interests

More and more people have turned to BlackRock as their asset manager because we offer investment strategies consistent with their goals and preferences.

We do not dictate how clients should invest; we offer a wide array of choice

Our clients have a wide range of views and goals and that’s why we offer clients a broad choice of investment products. They are designed to help clients meet their investment goals and reflect their priorities. For example, we offer U.S. investors more than 390 different iShares ETFs.3

The choice of where to invest ultimately rests with our clients. We are bound to adhere to their investment guidelines and objectives. We do not dictate particular investment strategies.

Our focus on climate risk and energy is about driving financial outcomes for clients

One of the most critical tasks of an asset manager is to provide clients with insights on short- and long-term trends in the global economy that can impact their portfolios. We do this across all sectors – from healthcare to technology to energy.

Climate risk is one such trend given its implications for the economy. We believe that companies that better manage their exposure to climate risk and capitalize on opportunities will generate better long term financial outcomes.

Our views on climate risk are not unique. In fact, governments, public companies, and investors are increasingly focused on these issues; in 2020 more than 90% of the S&P 500 published sustainability reports.4

Our consideration of the risks and opportunities of a transition to a low-carbon economy is in the interest of realizing the best long-term financial results for our clients and entirely consistent with our fiduciary duty.

We DO NOT boycott the energy industry

BlackRock has been accused of “boycotting” energy companies. Quite the opposite: BlackRock’s clients are some of the largest investors in the energy industry. In the U.S. alone, we have invested $225 billion on behalf of our clients in American energy companies, including pipelines and power generation facilities.5

BlackRock makes independent investment and voting decisions

While BlackRock participates in a wide variety of organizations on topics of interest to our clients, our investment decisions are governed strictly by our fiduciary duty to clients, and that duty requires us to prioritize our clients’ financial interests above any commitments or pledges not required by law.

We have not made commitments or pledges to meet environmental standards that constrain our ability to invest our clients’ money on their behalf consistent with their objectives.

Similarly, BlackRock does not make any commitment or pledge that would interfere with our independent determination on how to engage with issuers and vote proxies in the best long-term economic interest of our clients. This includes in relation to any shareholder proposals filed or supported by Climate Action 100+ or any of its members, and BlackRock explicitly stated as much when joining the initiative. Our voting record is demonstrably independent.

We also believe in choice when it comes to proxy voting. Every shareholder deserves the right to be heard. We are a leader in empowering clients to use their own voice by developing technology to give them the ability to vote their shares themselves.

Our take: We believe that restricting investment choices is bad for workers and retirees

Recently, a number of initiatives have restricted access to certain asset managers and funds. Limiting Americans’ ability to choose their investments jeopardizes their ability to meet financial goals such as retirement.

Open competition, the free flow of information, and freedom of opinions are core to the strength of U.S. capital markets. That strength is precisely why millions of people have been able to build savings during their working years. BlackRock is proud to play our part.

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I heard a stunning headline this morning in the Financial Times, state treasurers punish asset manager for pursuing policies allegedly hostile to fossil fuels industry. in other words, U.S. Republican officers are pulling one billion dollars from BlackRock over ESG investing concerns. Basically, the pension managers in some republican states are angry at BlackRock’s so-called green investing policies so they’re taking action. Utah is pulling some money out, Arkansas, Louisiana, South Carolina, Curtis Loftis the State Treasurer of South Carolina explained that while he admires BlackRock CEO Larry Fink he thinks this kind of sustainable investing as hypocritical. He talks about poor people historical minorities are having money and services diverted from them for these globalist leftist ideas. To me this is just plain nuts and not just because a billion dollar hit means nothing because BlackRock which by the way manages about 8.5 trillion dollars. More importantly BlackRock runs ESG funds because there’s demand for that. People are investing in companies that they think are doing good or at least not actively damaging the environment, they want to be able to switch not just be in a regular fund. Yes ESG matters, they have a ton of non-ESG funds to at BlackRock it’s not like they’re force feeding people doing this. Let me give you 2 pieces of sanity about this and it does make me angry. First the demand is real so many people want to invest this way that when you look at the biggest winners the SP500 and NASDAQ they tend to be companies that are passionate about moving away from fossil fuels. I’ve just finished analyzing the winners of the third quarter some of the best performers were companies that make it their business to help the environment. So if you think ESG investing somehow hurts poor people or historical minorities you haven’t looked at the facts of what stocks were winning provided they have actual earnings and good balance’s. Second note what makes this whole move a total travesty is that of the asset managers I know Larry Fink is by far the most levelheaded on the climate issue. He doesn’t want us to go green at all costs, he doesn’t favor higher gasoline prices something stupid like that he doesn’t want us to be like Germany which fools you decide to mothball its nuclear plants replace them with Russian natural gas instead Larry’s been the driver of the brown and green concept overtime. If you think that’s anti fossil fuel guess what nearly every major oil CEO feels the same way, they recognize they have to change and they’re spending furiously to go green In other words, if you want to vilify Larry Fink for favor and cleaner skies at expensive lower energy costs well guess what you got the wrong asset manager. buzzing sound effect

Finks thoughtful, he’s offering the choices that people really do want especially younger people who care a lot more about climate change because they’re gonna have to live with it. But you keep having extreme weather events the science says that they’re going to keep getting worse. It’s turning into a business problem you ignore climate change you ignore what could turn out to be the biggest risk factor of all time just a few years down the road. So it makes me sick to my stomach to think BlackRock’s being singled out in the stuff I know tons of managers who are a lot more zealous. Honestly I don’t know a soul in the money management business who’s a climate change denier, which is doubtless who these state treasurers want to invest with. We only know Finks views on this stuff because he has a backbone, he isn’t afraid to voice them in public. Even if he’s often criticized from both sides either for being too green or not green enough. You know what here’s what I think, when you’re attacked from both sides you tend to be exactly where you should be which is why I admire this man and his firm so much.

Quotation start

We only know Fink’s views on this stuff because he has a backbone and is not afraid to voice his opinions in public even though he is often being criticized for being too green or not green enough.

Jim Cramer
CNBC/Mad Money – October 11, 2022