Surprise, Surprise: BlackRock's Big Green Promises Evaporate As It Props Up Dying Industries W. Fed
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In the months since Fink's announcement, the investing landscape has changed more than anyone could have anticipated, and BlackRock will play a leading role in what comes next. On March 24, the Federal Reserve selected the Wall Street giant to run three bond-buying programs, including participating in a $US750 billion plan to prop up struggling American companies by buying corporate debt on the central bank's behalf. It's not the first time BlackRock has been asked to help in an emergency. In the aftermath of the 2008 financial crisis, the company played several roles in a controversial government plan to manage toxic assets. This time, BlackRock has been pulled into a partisan debate over whether unprecedented borrowing should be used to invest in sustainable industries.
Not long after the asset manager's role with the Fed was announced, Republican senators wrote Fed Chair Jerome Powell and US Treasury Secretary Steve Mnuchin seeking guarantees that BlackRock would hew to its fiduciary role and not leave out energy and transportation (read: coal) companies. Democrats soon followed up, urging Powell and Mnuchin to ensure debt purchases aren't used to bail out fossil fuel companies that were in trouble before the new coronavirus struck.
Fink has told shareholders the pandemic should be used as an "opportunity to accelerate into a more sustainable world." But when it comes to the company's work for the Fed, his hands are tied. Although BlackRock scoops up corporate bonds and exchange-traded funds on behalf of the government, it must follow Fed guidelines rather than its own. That means buying investment-grade and high-yield debt from companies in need regardless of environmental footprint-thus leaving fossil fuel companies free to participate.
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Climate activists say they had hoped the Fed's massive outlay, and BlackRock's role in it, could serve as a once-in-a-lifetime opportunity to jump-start American investment in a renewable future. Only three days after the company's selection, environmental groups including Greenpeace and the Sierra Club urged Powell to weigh climate risk when deciding what sectors of the economy get financial support. But to no avail. Brian Deese, BlackRock's global head of sustainable investing, declined to comment on the Fed programs. He said investors are watching whether governments will infuse rescue packages with sustainable components.
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https://www.smh.com.au/business/companies/blackrock-s-green-dream-got-complicated-fast-20200608-p550cx.html
