BlackRock accused of “misleading investors” with some of its “sustainable” investments

This is a case emblematic of the tensions that run through the sustainable investment sector. The NGO ClientEarth announced that it had filed a complaint on Wednesday October 16 against BlackRock with the French Financial Markets Authority (AMF). She accuses the world’s leading asset manager of presenting as “green” investment funds which nevertheless include numerous fossil assets.

Based on an analysis published by the specialized NGO Reclaim Finance in March, ClientEarth says it has identified 18 BlackRock investment funds managed and marketed in France whose “sustainable” designation would be questionable. At issue, according to the NGO: the exposure of these funds to companies in the fossil fuel sector such as ExxonMobil, Shell, TotalEnergies, Chevron or BP, up to 1% to 27%, depending on the case. This represents, across these portfolios, more than a billion dollars of investments in oil, gas or coal.

“These BlackRock funds are misleading investors because they are accompanied by inaccurate claims”estimates Alex Bennett, lawyer at ClientEath. According to the lawyer, these practices create a distortion of competition in the market and “divert capital flows away from truly sustainable products”. The NGO calls on the AMF to investigate these funds and take “a strong response [pour] ensuring transparency and investor protection”. It also asks BlackRock to put “to bring order to its supposedly “sustainable” funds”.

The difficult cleaning of “green” funds

Contacted by The Worldthe financial manager disputes these allegations. “BlackRock funds are managed in accordance with their investment objectives, which are clearly stated in each fund’s prospectus and on the website”writes a company spokesperson. The latter ensures compliance with all regulations on sustainable investment.

“Green” investment funds have multiplied since the early 2000s, particularly since the Paris climate agreement. But behind the commercial speeches of financial institutions, the real environmental ambition of these funds is variable.

Several attempts to put things in order have so far had mixed effects. The European SFDR regulation, which entered into force in 2021, created categories of funds, supposed to reflect their level of environmental and social ambition. But due to a lack of strictly defining what a “sustainable” fund may or may not contain, many “green” funds have continued to invest in fossil fuels, as a survey by the Monde in 2022.

French and European regulators have since paid greater attention to the question of the names of investment funds. Many investments mention « durable », ” climate “ or « vert » in their name without always living up to the implicit promise that these qualifiers imply. It remains to be seen whether the implementation of stricter rules in this area will lead asset managers to favor assets that are more environmentally friendly, or simply to remove environmental mentions from the names of their investments.