BlackRock, the world’s biggest investor, has lost an estimated $90bn over the last decade by ignoring the serious financial risk of investing in fossil fuel companies, according to economists.
A report from the Institute for Energy Economics and Financial Analysis (IEEFA) has found that BlackRock has eroded the value of the $6.5tn fund by betting on oil companies that were falling in value and by missing out on growth in clean energy investments.
The report found that BlackRock’s multi-billion dollar investments in the world’s largest oil companies – including ExxonMobil, Chevron, Shell and BP – were responsible for the bulk of its losses.
The fund was also stung by the collapse of big US fossil fuel companies, including General Electric, and the coal mining company Peabody.
BlackRock faces growing pressure to divest from fossil fuels by investors and environmental groups, which have accused the asset manager of dragging its feet on the climate crisis.
Tim Buckley, a director at IEEFA and co-author of the report, said BlackRock’s enormous financial heft meant it should take responsibility for leading on the climate emergency.
The mega-fund is larger than the economy of Japan, the third largest economy in the world, making it the single largest investor in the global coal industry and one of the top three investors in most big oil companies.
“BlackRock wields an enormous amount of influence and shoulders a huge responsibility to the wider community. It has the power to lead globally to address climate risk, yet, to date, it remains a laggard,” Buckley said.
The report follows a stark warning from the Bank of England over the “significant risks to the economy and to the financial system” posed by fossil fuel investments.
The Bank has estimated that investments worth $20tn could be left “stranded” as governments set more ambitious climate targets.
BlackRock has denied responsibility for its fossil fuel investments because the majority of its funds track investment indices which are controlled by third parties, meaning it does not choose individual companies to back.
The IEEFA has used the report to call on BlackRock to propose its own low emissions index benchmark for the passive funds to avoid risking its clients’ investments.
It has also called on the fund to appoint a new independent chairman and refresh its 18-strong board, where six members are former executives from companies with close ties to the fossil fuel industry.
A spokesman for BlackRock said the fund offered clients the option to invest in environmentally and socially responsible funds as well. These funds made up 0.8% of BlackRock’s total portfolio.