Top U.S. asset managers worried that signing up to an industry climate initiative could make them appear to be working too closely together and draw regulatory scrutiny, according to a report released Friday by a Republican-led U.S. Congressional Committee.
The report is the latest released by the panel’s Republican majority as part of a probe they say has shown fund firms and activists are part of a “climate cartel” that colludes through shareholder organizations pressing to cut emissions. The committee’s Democrats have dismissed those allegations.
Top fund firms have denied wrongdoing, but material cited in the report shows they had always been concerned about appearing too cozy with shareholder groups engaged in climate activism.
BlackRock’s view in 2019 was that “We don’t do collective action/engagements. Too risky,” according to the report, citing an e-mailed summary of a meeting that unidentified BlackRock executives held with Ceres, a Boston-based environmental advocacy group, obtained by the committee.
Likewise State Street also raised concerns around 2020 about “collusion” if it joined a Ceres-backed effort to press companies to cut emissions known as the Climate Action 100+, according to the report. The firm worried about raising the “perception of engaging or voting as a block,” the report states.
BlackRock declined to comment. State Street and Ceres did not immediately comment. Both wound up joining the group known as the CA100+, then stepped back earlier this year citing independence concerns.
Republican officials, many of them from oil and gas producing states, have objected to investors coordinating to pressure corporate management on climate issues at the expense of corporate growth and returns.
Last month Republican attorneys general from 11 states sued BlackRock, State Street and Vanguard, saying their climate activism reduced coal production and boosted energy prices. The firms collectively manage $26 trillion. BlackRock and State Street have denied wrongdoing, while Vanguard has declined to comment on the matter.
U.S. president-elect Donald Trump campaigned against President Joe Biden’s moves to fight climate change and promised to boost U.S. oil and gas production. In theory Trump’s administration could follow up on the congressional committee’s findings. A spokesperson for the committee declined to comment on what if any talks it may have had with current or future administrations.
(Reporting by Isla Binnie in New York and by Ross Kerber in Boston; Editing by David Gregorio)