BlackRock has secured a key role in advising the EU on how to integrate sustainability into banking regulation, underlining its close relationship with policymakers around the world and marking a win in the asset manager’s efforts to burnish its climate-protecting credentials.
In a filing last week, the European Commission said BlackRock’s Financial Markets Advisory will study how the EU could use environmental, social and governance-related factors in the prudential supervision and regulatory risk analysis of the region’s banks. BlackRock will also analyse how the EU could boost the growth of green finance and the market for sustainable financial products. It beat eight unnamed rivals to secure the role.
The move comes shortly after the same BlackRock consultancy unit won a contract to manage assets for the US Federal Reserve as part of the central bank’s efforts to help markets and the economy struck by the coronavirus downturn. That programme involves overseeing the purchase of exchange traded funds, including some that are operated by BlackRock itself.
The new EU contract will pay BlackRock €280,000, and will help to bolster the company’s often-criticised credibility on sustainable investing. The investment manager has come under fire for voting against ESG shareholder petitions at companies, and BlackRock was accused of failing to match its green rhetoric with action last year.
As the world’s largest asset manager with a vast passive investing business, BlackRock funds own large stakes in most of the world’s listed companies, including large oil and gas groups.
Chief executive Larry Fink changed course in his 2020 letter to company executives, saying BlackRock will now assess ESG with the same rigour as conventional credit and liquidity risks. BlackRock is also pushing companies to disclose more information about their environmental risks.
“BlackRock’s proposal was the best offer compared to the other tenders — both technically and financially,” a spokesperson for the commission said in a statement.
The BlackRock study “will only be one of the many reports and consultations that will inform the commission’s policy on sustainable finance”, the spokesperson added.
Separately on April 8, the commission asked for public feedback for a new sustainable finance strategy. The effort, a part of the green deal package, aims to embed sustainability into Europe’s recovery from the coronavirus crisis. The commission wants to adopt a plan in the second half of 2020.
“We are currently battling the coronavirus outbreak, but we must not lose sight of our long-term sustainability objectives,” said Valdis Dombrovskis, a commission executive vice-president.
Additional reporting by Richard Henderson
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