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BlackRock ( BLK ) cites legal inquiries for leaving NZAMI

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Republicans criticize 'woke capital', sue top fund

managers

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So far other asset managers remain in group

(New throughout, adds statement from NZAMI, comment from other

fund executive and BlackRock ( BLK ) rivals remaining in NZAMI)

By Ross Kerber

Jan 9 (Reuters) -

BlackRock ( BLK ), the world's biggest asset manager, said

on Thursday it will leave the Net Zero Asset Managers

Initiative, the latest Wall Street firm to leave an

environmentally focused investor group under pressure from

Republican politicians.

BlackRock ( BLK ), which manages some $11.5 trillion, said that with

two-thirds of its global clients committed to cutting emissions

to net zero, it had made sense to join groups like the

organization known as NZAMI.

"However, our memberships in some of these organizations

have caused confusion regarding BlackRock's ( BLK ) practices and

subjected us to legal inquiries from various public officials,"

leading to the departure, according to a client letter reviewed

by Reuters.

Its departure, BlackRock ( BLK ) said, "does not change the way

we develop products and solutions for clients or how we manage

their portfolios." The firm said its active portfolio managers

"continue to assess material climate-related risks."

NZAMI members pledge to support the goal of net zero

greenhouse gas emissions by 2050, using influence such as how

they vote their proxies at corporate meetings. The group

currently counts more than 325 signatories managing more than

$57.5 trillion, according to its website.

Major Wall Street lenders have left a similar climate

organization for banks in recent weeks ahead of the return of

U.S. President-elect Donald Trump and as his fellow Republicans

take control of Congress. While the departures may not have a

direct effect on lending or share purchases, the companies'

participation was seen as a marker of investors' environmental

priorities.

In December a Republican-led congressional committee sought

information from BlackRock ( BLK ) and dozens of other asset managers

involved with NZAMI. In November BlackRock and rivals were sued

by Texas and 10 other Republican-led states that claimed their

activism cut coal production and boosted energy prices.

BlackRock ( BLK ) has denied wrongdoing and said the lawsuit

"discourages investments in the companies consumers rely on."

BlackRock's ( BLK ) exit so far has not prompted others to follow.

Representatives for two of its rivals, the asset management arms

of State Street and JPMorgan ( JPM ),, said on Thursday

they remain NZAMI members. Another major passive fund manager,

Vanguard, left the group in 2022.

A NZAMI spokesperson via email called any investor

withdrawal disappointing.

"Climate risk is financial risk. NZAM exists to help

investors mitigate these risks and to realise the benefits of

the economic transition to net zero," the spokesperson said.

Leslie Samuelrich, president of Green Century Funds, had

dropped out of NZAMI in 2023

even though her firm avoids oil and coal stocks. On

Thursday she called the departures by bigger firms

"disheartening" since their memberships showed investors want

lower-carbon portfolios.

"This is short sighted given the stark realities of

climate change and the need to push for environmentally

responsible actions in corporate America," Samuelrich said.

CLEANING THINGS UP

Efforts such as NZAMI, which was created in 2020 and

boosted by a 2021 United Nations climate conference, began

without controversy as world leaders looked for ways to harness

capital to transition the world to cleaner energy sources.

But U.S. Republican officials, many from energy-producing

states, have disparaged the efforts as "woke capital" claiming

they violate antitrust laws.

Representatives for Republican critics including Texas

Attorney General Ken Paxton and U.S. House Judiciary Committee

Chairman Jim Jordan did not immediately respond to questions

about BlackRock's ( BLK ) withdrawal.

In its client letter, BlackRock ( BLK ) said its

sustainable-investment efforts are "driven by the needs of our

clients and our continued investment conviction that the energy

transition is a mega force shaping economies and markets."