Bob Chapman reports for the Independent
The world’s largest investment firm, managing more than $6.5 trillion (£5.4 trillion), has been accused of costing investors tens of billions of dollars in returns over the past decade by backing fossil fuel companies like Shell and ExxonMobil.
A new study suggests that New York-based fund manager BlackRock’s bets on oil and gas companies have underperformed the market to the tune of $90bn as the risks of climate change have become clearer.
BlackRock manages funds, including people’s life savings and pensions, that are worth more than the entire annual output of Japan’s economy. Its chief executive and chairman Larry Fink sends out a letter to investors each year in which he espouses the virtues of investing in with purpose and an eye on social responsibility.
But analysis of the investment giant’s holdings suggests that its rhetoric on climate change risks does not match its actions, according to the Institute for Energy Economics and Financial Analysis (IEEFA).
The researcher and analyst, which receives its funding from philanthropic organizations, calculated that BlackRock’s investments in oil and gas firms have dragged down returns as those companies have destroyed value by failing to properly adapt to climate change.
The study undermines arguments from some fund managers that they must invest in oil and gas firms in order to fulfill their duty to act in the best interests of investors.
Three-quarters of BlackRock’s estimated lost returns have stemmed from just four companies: ExxonMobil, Royal Dutch Shell, BP and Chevron, all of which have underperformed the market.
A fifth company, General Electric (GE), has lost BlackRock investors $19.1bn between 2008 and 2018, when compared to the returns it could have made by investing in shares that performed in line with the wider stock market.
BlackRock holds more than half a billion shares in GE which saw an unprecedented $193bn wiped off its stock market valuation between 2016 and 2018.
