The gap between European and U.S. approaches to sustainable investing got wider this week when the Dutch pension manager Pensioenfonds Zorg en Welzijn (PFZW) withdrew US$17 billion from stock funds managed by BlackRock.
Concerns about BlackRock’s poor stewardship of climate risk were to blame for the break. PFZW says it is now pursuing an investment strategy that gives equal weight to financial performance, risk and sustainability.
The Dutch climate advocacy group Fossil Free Netherlands celebrated the move as a victory for its Break with BlackRock campaign, which it launched in January when the behemoth asset manager withdrew from the Net Zero Asset Managers alliance. More than 2,500 people wrote letters to their pension funds asking them to break ties with BlackRock, according to the non-profit’s website. “BlackRock is one of the world’s largest investors in the climate crisis,” the organizers wrote. “Climate risks are financial risks: when climate disasters strike, our pension money evaporates.”
BlackRock is the largest money manager in the world, reporting US$11.6 trillion in assets under management at the end of 2024, including $1 trillion of sustainable and transition assets. CEO Larry Fink was previously a strong advocate for investing strategies that consider environmental, social and governance factors, but the firm has dramatically scaled back its support for ESG-related proposals from activist shareholders since 2021, when it supported 47% of such proposals. Last year that support had fallen to 4%, and this year it’s at 2%. A spokesperson for BlackRock told Bloomberg that the asset manager continues to help clients meet their sustainable investment goals.
While U.S. investors are increasingly backing out of funds that consider ESG factors, many Dutch pension funds still view sustainability as a smart long-term investing strategy, Reuters reports. Another Dutch pension manager, PME, is also said to be reviewing its mandate with BlackRock.
Sustainability advocates were quick to identify the move by PFZW as a market signal for money managers that investors are raising their standards when it comes to accounting for climate risk and corporate social responsibility. “Pension funds are sending a clear message – asset managers must step up on climate stewardship, or risk losing major mandates,” writes Danny Takhar, business development manager for the sustainable investment platform Vericap in Vancouver.
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Others highlighted the link between ESG strategies and managing climate and transition risks. “Sustainability is risk management,” writes Sigrid Carstairs, a sustainability specialist at the Swedish renewable energy developer Eolus, in a commentary on the development. “This is not about looking good. It is not about marketing. It is about doing your job properly as a steward of capital.”
In February, the People’s Pension in the United Kingdom made a similar move, transferring US$35.3 billion in assets from State Street in the United States to be managed instead by other firms with ESG and net-zero alignment. “The People’s Pension’s broader mission is to balance strong financial performance with responsible investment principles,” Mark Condron, the fund’s chair of trustees, said at the time.
The gap between Europe and North America appears to be widening. A recent Financial Times survey asked institutional investors whether pulling back from ESG commitments damages their view of an asset manager. 70% of European respondents said it did, compared to 47% in North America.
Mark Mann is a journalist and editor at Corporate Knights. He is based in Montreal.
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