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The world's largest fund manager told the U.S. Securities and
Exchange Commission that it wants to launch a money-market fund
that will invest primarily in debt from issuers who have
better-than-average environmental practices.
BlackRock, which oversees nearly $6 trillion in assets, also
planned to commit 5 percent of the net revenue from its
management fee on the BlackRock Liquid Environmentally Aware
Fund, or LEAF, to purchase carbon offsets. Money from carbon
offsets generally funds projects that reduce emissions, such as
planting trees or trapping methane emissions from waste dumps in
developing countries.
Money-market funds invest in relatively safe short-term
government or high-quality corporate-issued debt. Companies and
investors treat the funds like cash and expect them to hold
their value, earn income and be available at a moment's notice.
It is rare for environmental factors to be taken into account as
part of the investment strategy. In a statement, BlackRock said
it would also make an annual payment to help the World Wildlife
Fund, a conservation group.
BlackRock Chief Executive Larry Fink has been under increasing
pressure by activist groups to address the perceived social and
environmental shortcomings of companies held by his funds.
Because the company's most popular products are index funds that
hold broad swaths of the market, BlackRock has a significant
stake in publicly traded companies worldwide that draw ire from
investors, including alcohol, tobacco and weapons manufacturers
as well as fossil-fuel companies. BlackRock also has a pivotal
shareholder vote in corporate-governance matters involving those
companies.
Last week, a hoax letter purporting to be from Fink claimed the
fund manager would require companies it owns to align their
businesses with measures to counter climate change. An advocacy
group took credit for the fake letter.
BlackRock has not asked companies to meet specific environmental
standards, saying its role is not to make political judgments on
its clients' behalf.
But it has pressed oil-and-gas companies including Exxon Mobil
Corp to provide more information about how environmental
regulations and related issues could affect their bottom lines.
The asset manager has also unveiled new products for people
focused on environmental goals.
In 2017, the company hired Brian Deese, a former Obama
administration official who helped negotiate the Paris agreement
on climate change, to run its sustainable investing group.
(Reporting by Trevor Hunnicutt; editing by Jennifer Ablan and
Cynthia Osterman)
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