Days after BlackRock left Net-Zero Asset Managers, which was created to align asset management companies and global climate goals, the coalition said it was suspending operations.
NZAM made the announcement January 13. BlackRock left NZAM on January 9 following political backlash, governmental questions and pressure from Republican officials. NZAM was created in 2020. Since then, executives have tended to back away from such environmental, social and governance (ESG) issues when making investment decisions.
Robert H. Bork Jr., president of the Antritrust Education Project, said the collapse of the net-zero movement shows the entire effort “was half-baked, fashionable impulses in the service of virtue signaling and environmental and economic hypocrisy.”
“The Sherman Antitrust Act, by contrast, is simple and direct in its outlawing of the restraint of trade,” Bork said. “That is why it won the game of policy rock-paper-scissors.
“The Sherman Antitrust Act is unequivocal. It flatly forbids the restraint of trade. What was occurring in plain sight was the restraint of the oil and gas industry, a legal industry the last time I checked. BlackRock and other big asset managers were coordinating with each other and with NGOs to make it harder for U.S. and European oil companies to continue to explore new fields, including the natural gas fields that are replacing coal-burning power plants and driving down emissions.”
But,Bork said economic and environmental logic were never what this was about.
“In 2017, Larry Fink said that ‘at BlackRock, we are forcing behaviors,’” Bork said. “That is not the role of an asset manager or a fiduciary for so many investors. Forcing behaviors should only come about through democratic politics leading to policy changes that society accepts.”
Bork said BlackRock was working hard to restrict new supplies of oil and gas while investing in oil and gas.
“What happens to a vital commodity when you restrict it?” Bork asked. “It puts upward pressure on the value of that commodity and the equity value of the companies that produce it. Their shaming and intimidation of oil companies only worked in the democratic West. This made no environmental sense.
“The movement sought to force U.S. and EU oil companies to replace their output with imported oil chugged across the oceans in massive, carbon-belching tankers. The whole net-zero movement was a mix of policy arbitrage and boutique ideology that had no real-world impact on climate and a negative impact on investors.”
To put it simply, Bork said people got hurt.
“‘Sustainable’ funds trailed the S&P 500 by a considerable amount,” he said. “It turned out that forcing companies to buy solar panels manufactured on China’s coal-fired electrical grid cannot match fat returns from traditional energy.”
Bork said he thinks the actions of state attorneys general fighting the net-zero and ESG initiatives made a big difference.
“I believe the actions of state attorneys general shocked (BlackRock CEO) Larry Fink and others when their general counsels brought home the grim realization that they had been breaking the law in public,” Bork said. “That is why we now see an enormous pullback. But the disingenuous behavior of the big asset managers will merit continued scrutiny.”
Tennessee Attorney General Jonathan Skrmetti, who announced a settlement in his state's lawsuit with BlackRock last week, agreed.
"They (NZAM) probably finally had antitrust lawyers look at everything and say, 'That’s a terrible idea. It was a good sign that people were voluntarily jumping ship there."