BlackRock Exits Climate Activist Group After Pressure From Republicans

BlackRock announced this week that it was leaving a major climate activist group after Republicans criticized its involvement with the group.

The company said in a letter that it would be leaving the Net Zero Asset Managers (NZAM) initiative, an organization of asset managers committed to “supporting the goal of net zero greenhouse gas emissions by 2050 or sooner.” At one point, NZAM boasted its members controlled over $57 trillion in assets.

BlackRock’s announcement comes after 11 Republican attorneys general, led by Texas AG Ken Paxton, filed a lawsuit in November against the asset manager over its involvement with groups like NZAM. Texas’ lawsuit accused BlackRock of violating antitrust laws by allegedly engaging in a conspiracy with other asset managers to constrict the market for coal. BlackRock has denied the allegations and said the suit is without merit.

BlackRock’s letter, first obtained by Bloomberg, acknowledged that its involvement with NZAM “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.” […]

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Elon Musk’s Take on Standards: Why They Matter for Life-Saving Professions

Should society ever lower the standards for critical professions? Elon Musk argues no, and he provides a compelling reason: lives are at stake. In areas like surgery or oncology, a single mistake can be fatal. Musk’s stance boils down to a simple but powerful idea—standards protect lives.

The Danger of Lowering Standards

Think about fields like medicine, where precision and judgment can mean the difference between life and death. Musk suggests that lowering the bar in such critical professions could result in more errors. And more errors mean more preventable deaths.

This might seem like a straightforward argument, but it’s worth considering the consequences in real-life scenarios. Would you trust a surgeon or an oncologist who barely scraped through their certifications? Probably not. Musk’s point is clear: maintaining high standards is not just a matter of competence—it’s about preserving lives.

Skills and Integrity Matter Most

According to Musk, the focus should be on skills and integrity when assessing someone’s capability. What actually makes a good surgeon or specialist? It’s their ability to perform under pressure, diagnose accurately, and stay committed to their work.

By sticking to these core qualities, we ensure that the best people—regardless of background—are the ones entrusted with critical roles. Musk argues that injecting unrelated criteria into these fields could dilute the pool of qualified professionals, ultimately putting patients at risk.

What Does This Mean for Broader Policies?

Musk’s comments touch on broader conversations about hiring practices and standards in various industries. Whether it’s healthcare, engineering, or any field where errors can have severe consequences, the priority should always be competence.

Compromising on standards in the name of inclusivity or diversity may sound noble, but it could come at a high cost. Musk emphasizes that fairness should be about treating people based on their abilities, not lowering the expectations for everyone.

The Bigger Picture

Elon Musk’s perspective raises an important question: what are we willing to risk to adjust the rules? While inclusivity is essential, it shouldn’t come at the expense of public safety. The stakes in fields like medicine demand an unwavering commitment to excellence.

When it comes to life-and-death roles, skills and integrity should always take center stage. High standards aren’t outdated—they’re safeguards for our future.

Conclusion

At its core, Musk’s argument is about balance. Inclusivity should be encouraged but not at the expense of quality or safety. For professions where mistakes can cost lives, standards exist for a reason. Treating people fairly doesn’t mean lowering the bar—it means valuing excellence and keeping trust intact.

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“The facts here compellingly established fiduciary misconduct in the form of conflicts of interest and the failure to loyally act solely in the Plan’s best financial interests,” wrote US District Judge Reed O’Connor in a ruling that followed a four-day bench trial in June 2024. That duty of loyalty is imposed by the Employee Retirement Income Security Act (ERISA).

The ruling is certain to set off alarms in general counsel offices and boardrooms across America. For starters, 401(k) plans at 60% of Fortune 100 employers contain BlackRock investments, and BlackRock manages a huge chunk of the federal government’s Thrift Savings Plan. Of course, BlackRock isn’t the only asset manager whose ESG problem could become an employer’s problem.

Notably, the American Airlines plan didn’t offer any explicitly-ESG investment options. The issue was BlackRock’s intrinsically ESG-oriented management of all its funds. “This is not about ESG funds at all,” Josh Lichtenstein of law firm Ropes & Gray told the Financial Times. “This, to me, looks like the same claim could be brought against literally any 401k plan in America.”

With former pilot Bryan Spence as lead plaintiff of upwards of 100,000 participants, the class action suit accused American Airlines and its employee benefits committee of choosing investment managers that “pursue leftist political agendas” — sacrificing investment returns in favor of woke environmental, social and governance (ESG) goals like promoting workplace diversity or decreasing the use of fossil fuels.

While BlackRock wasn’t a defendant, the $11.5 trillion behemoth was nonetheless front and center in the case. To make the case that BlackRock’s priorities were warped, O’Connor quoted liberally from CEO Larry Fink himself, including his 2018 threat that companies must “contribute to society . . . or risk losing the support of the world’s largest asset manager.”

“BlackRock’s ESG influence is evident throughout administration of the Plan,” wrote O’Connor, a George W. Bush appointee, who credited claims that ESG takes a steep toll on returns: “By focusing on non-pecuniary interests, ESG investments often underperform traditional investments by approximately 10%.”

Given its enormous size, BlackRock also has the power to reduce the profitability of the companies it holds shares in — by voting its shares in ways that are detrimental to the bottom line. Among several examples, the plaintiffs pointed to Blackrock’s infamous 2021 ExxonMobil proxy vote — in which the firm helped secure two board seats for activist investor “Engine No. 1,” with the goal of pressuring the fossil fuel company to reduce its emphasis on fossil fuels and to commit to fighting “climate change.” At the time, BlackRock was ExxonMobil’s second-largest shareholder.

Characterizing American’s relationship with BlackRock as “incestuous,” O’Connor noted that BlackRock is simultaneously the largest investment manager of American’s 401(k) plan, one of American’s largest shareholders, and financier of $400 million of the company’s debt: “It is no wonder Defendants repeatedly attempted to signal alignment with BlackRock.” Further making the case that American’s disloyalty to its employees may have been driven by BlackRock’s “outsized influence,” he wrote, “As a large company [that] consumes copious amount of fossil fuels, American was potentially susceptible to a proxy fight of its own by failing to comply with BlackRock’s climate-related demands.”

Here are a few more notable quotes from O’Connor’s 70-page ruling:

• “A pursuit of non-pecuniary interests, in whole or in part, was an end itself rather than as a means to some financial end…The evidence made clear that BlackRock wanted to play its part in combating perceived social ills by bolstering DEI and climate change initiatives.”
• “The belief that ESG considerations confer a license to ignore pecuniary benefits is mistaken. ERISA does not permit a fiduciary to pursue a non-pecuniary interest no matter how noble it might view the aim.”
• Despite widespread coverage of the ESG controversy, “Defendants utterly failed to loyally investigate BlackRock’s ESG investment activities.”
• “Plaintiff proved by a preponderance of the evidence that American disloyally acted with an intent to benefit a party other than Plan participants and in a manner that was not wholly focused on the best financial benefit to the Plan.”

A ruling on damages or another form of relief will come later. Though he ruled that American breached its duty of loyalty to plan participants, O’Connor concluded American did not breach the duty of prudence — because prudence is judged by prevailing industry standards, and the asset management industry is, for now, regrettably dominated by ESG-minded firms.

In December, O’Connor fired a shot at a different strain of wokeness. He tossed out a plea deal between the Justice Department and Boeing — because the Biden administration included a requirement that diversity should be a consideration in selecting a compliance monitor. “In a case of this magnitude, it is in the utmost interest of justice that the public is confident this monitor selection is done based solely on competency,” wrote O’Connor, whose court is in Fort Worth.

As evidenced by recent ZeroHedge headlines, the welcome ruling against ESG’s malign influence on workers’ wealth-building is just the latest in a string of victories over woke ideology in general:

• Meta Nukes DEI Program; “Morale For Queer Staff In Shitter”; Zuckerberg Joins Joe Rogan Podcast
• Another DEI-mino Falls: McDonald’s Latest To Bail On Diversity Goals
• ‘Fact-Checkers Too Politically-Biased’ – Zuckerberg Abandons Facebook Censorship For X-Like Community Notes
• Walmart Nukes DEI As Anti-Woke Crusader Robby Starbuck Sends “Shockwaves Across Corporate America”
• Celebrating The Death Of Woke And The Resurrection Of Common Sense

• DEI Programs Are Ending but Woke Practices Are Just Being Relabeled
• Don Jr Drops Bombs on Squad Member’s Gaslighting
• ESG Is Not Dying, It’s Just Getting Relabeled
• Gavin Newsom Whines About Misinformation
• How Can We Stop AGI?
• LA’s Diversity Hire Fire Chief Points Finger at City of Los Angeles
• Mark Zuckerberg’s Apology Tour Is a Trap
• Was the Malibu Fire Started to Destroy Diddy Evidence

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But now with President Trump once again taking the White House, one investment bank is advising ESG fund managers to “keep their lawyers very close”, as the full scale death of ESG may very well be on the door step, according to Yahoo Finance.

Aniket Shah wrote in a note this week: “We’d encourage all ESG fund managers to have a lawyer on the team, or on speed-dial.”

He continued: “Antitrust risk remains high for asset managers in ESG; there haven’t been any cases yet, thus there is no legal precedent. Further, legal risks regarding fiduciary duty will stay relevant as states enforce anti-ESG laws.”

Yahoo reports that Trump’s victory has already hit green sector stocks, with wind-energy companies among the hardest hit. Beyond potential bans and obstructive policies, the ESG sector faces rising legal risks.

Key GOP figures argue ESG-focused firms neglect fiduciary duties, while Republican attorneys general accuse financial firms using ESG metrics of collusion against fossil fuels and fueling inflation.

In response, “greenhushing”—keeping ESG efforts quiet—is likely, Jefferies analysts note. Corporate CEOs are also expected to seek legal guidance to adapt to this shifting landscape.

Jeffries said: “General counsels are in the ear of CEOs, frightened about legal retaliation to ESG initiatives. The backlash could lead to more focused and pragmatic companies, engaging in strategic discussions closely tied to their business model.”

Analysts argue that a public backlash, similar to 2016, could pressure companies to address issues like abortion and diversity. Conflicting state policies on ESG could create a “nightmare” of fragmented requirements, they warn.

Shareholders may still push for ESG risk disclosures aligned with the International Sustainability Standards Board, even as the U.S. Chamber of Commerce maintains it isn’t against ESG or climate disclosures. Notably, these observations focus on the ESG label itself, not the broader clean energy transition.