America’s Money Managers Have Retreated From Supporting Sustainable Investment Goals

BlackRock is one of the world’s largest managers of pension funds and other types of client investments. In 2021, BlackRock’s CEO, Larry Fink, in a letter, described to clients the company’s commitment to sustainable investment and a net-zero future, placing it at the forefront in establishing ESG best practices.

That was then, and this is now. With Donald Trump winning the 2024 election, BlackRock has changed its tune, with other U.S. money and investment managers following suit. Last year, collectively, they withdrew more than US$20 billion from sustainable funds under management, advising their clients about this new Trump appeasement strategy.

With Trump’s ascension, BlackRock and other American money managers, including banks, decided to operate as if climate change was no longer the existential threat that they had described four years earlier. Instead, they got quiet, changed the language used to describe their investment strategies, and abandoned ESG. ESG stands for Environmental, Social and Governance criteria used to evaluate corporate performance and determine where investments should go. Each letter exemplifies meeting several criteria:

• E is for Environmental, which refers to planetary impact issues like climate change, pollution, conservation and energy sourcing.
• S is for Social, looking at how companies manage employees, customers, suppliers and the larger community.
• G is for Governance, reviewing best management practices, executive and board diversity and compensation, shareholder rights and overall good corporate citizenship within a global context.

Trumpian policy shifts soon trickled across the 49th parallel into Canada. Four of Canada’s leading banks withdrew from an initiative led by Mark Carney, the current Canadian Prime Minister, who, in an earlier role, was a key sponsor of the United Nations-backed Net-Zero Banking Alliance.

Canadian asset managers quietly removed references to ESG from marketing literature, replacing the term with “sustainability” and “responsible investing.” Even Canada’s Pension Plan Investment Board (CPPIB), responsible for the Canada Pension Plan, retreated from its net-zero and ESG pledges in light of the American government’s policy shifts.

Trump equated diversity, equity and inclusiveness (DEI) with “woke.” His administration began a housecleaning of all federal government departments, removing DEI programs from their mandates and firing thousands of employees. The administration also showed its anti-climate change, pro-fossil fuel, anti-vaccine and America First credentials and began a tariff war with the rest of the planet.

Are BlackRock and other American investment managers following all of Trump’s woke and environmental agenda policies? If so, they are in a conflict of interest with their responsibilities for managing international pension funds and foreign company investments. That hasn’t, however, stopped their retreat from DEI, ESG and net-zero emission aspirations.

In letters to clients, companies like BlackRock have used more cautious language and muted discussions about ESG and responsible environmental stewardship. These moves can be described as possibly being irresponsible and a bit harsh, a betrayal of future generations and the health of the planet, a strategy to mollify the current Washington regime, or an abandonment of global client investment responsibilities, and maybe a bit of all the aforementioned.

By betting on the President’s agenda and choosing America First over global responsibilities, the BlackRocks of America, who principally buy and sell other people’s assets, are not acting based on the timelines associated with climate change. That’s because buying and selling are short-term actions, whereas environmental and climate change stewardship requires decades of focus. So, maybe BlackRock and others are choosing the easy way out.

In a 2019 Morgan Stanley study, it forecast that the world would have to spend US$50 trillion beginning then to achieve a net-zero global economy and keep atmospheric temperature rise to no more than 2°C (3.6°F). The consequences of delaying actions would only cause the price tag to rise, or, if no actions were taken, create environmental conditions yet to be imagined.

Relying on free market solutions led by companies like BlackRock, therefore, seems problematic if not downright stupid. These money managers, however, are being subjected to American government pressures while managing more than the money of Americans. Their portfolios encompass hundreds of billions of dollars from scores of countries and businesses across the globe. Concern about BlackRock and other American investment managers’ change of stance has European, Canadian, and other overseas asset managers asking for client approval to end their U.S. partnerships.