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Brazil: BlackRock labelled 'world’s largest investor in deforestation'; company responds

According to report by Friends of the Earth US (FOE), Amazon Watch and Dutch research firm Profundo, BlackRock is the world’s largest investor in deforestation with holdings in six sectors - soy, beef, palm oil, rubber, timber and pulp/paper, all of which have been accused for encouraging the devastation of the Amazon in Brazil. The Business and Human Rights Resource Centre contacted BlackRock for a response to these allegations; the response is below. Amazon Watch and FOE submitted a rejoinder to BlackRock's response; also available below. BlackRock declined to respond to the rejoinder.

Matt Zimmerman

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NGO rejoinder
6 December 2019

Amazon Watch & Friends of the Earth US' rejoinder to BlackRock

Author: Amazon Watch & Friends of the Earth US

Given the urgency of the deforestation and human rights crises across the world, we find BlackRock’s response weak and at points misleading. BlackRock is once again deflecting urgent real-world concerns by stating what it can’t do, rather than considering what it can... BlackRock begins by attempting to shift responsibility onto its clients... [and] attempts to shift blame away from itself onto the structure of index funds... We certainly have yet to see evidence that any of BlackRock’s engagements had a measurable impact on the 2019 fire crisis in the Amazon, or Indonesia, or anywhere that companies under BlackRock’s stewardship are extracting profit at the cost of systemic and systematic abuses.

... With regard to the Amazon rainforest, Amazon Watch and Friends of the Earth US, along with Rainforest Action Network and Greenpeace US, have communicated to BlackRock via various channels about concrete ways it could engage with companies linked to forest destruction in the Amazon that would produce concrete results. Yet the best we get from BlackRock is boilerplate corporate PR-speak about why it can’t take any meaningful action. BlackRock’s refusal to communicate with us directly about specific actions makes its lack of seriousness painfully apparent. 

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Company response
29 October 2019

BlackRock response

Author: BlackRock

Sound corporate governance practices, including how companies manage the material environmental and social factors inherent to their business models, have the potential to impact the long-term value of our clients’ assets.  More than 90% of our equity holdings are held through index funds and ETFs – which are designed to track the investment results of third party indices – that our clients choose to invest in.  Our obligation as an asset manager and a fiduciary is to manage our clients’ assets consistent with their investment priorities. 

Absent the option to divest from these companies, we engage with them to evaluate how they manage the material sustainability-related risks and opportunities within their businesses, and encourage them to adopt the robust business practices consistent with sustainable long-term performance.  BlackRock’s Investment Stewardship team engaged 256 companies globally this past year on environmental risks and opportunities, spanning topics from the robustness of board oversight, ESG disclosure frameworks, climate risk management, environmental impact management (e.g., Deforestation), and operational sustainability (e.g., waste, water, energy efficiency, packaging).  Where we have concerns that are not addressed by these conversations, we stand ready to vote against proposals from management, such as against relevant directors on the board...

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Item
30 August 2019

BlackRock in Amazon: 'World's largest investor in deforestation'

Author: Al Jazeera

…[A] report released on Friday shows that BlackRock, the world's largest asset manager, holds extensive investments in the sectors deemed responsible for the devastation of forests in Brazil.

With $6.5 trillion of assets under management, BlackRock was labelled the "world's largest investor in deforestation" by the report's authors - Friends of the Earth US, Amazon Watch, and Dutch research firm Profundo.

The report, BlackRock's Big Deforestation Problem, looks at financial data from 2014 to 2018 showing the global investment management firm to be among the top three shareholders in 25 of the planet's largest publicly traded companies with "deforestation risk".

The data reveal that BlackRock's holdings in six sectors - soy, beef, palm oil, rubber, timber and pulp/paper - have increased by more than $500m in the last five years.

Jeff Conant, the report's lead author and senior international forest programme manager with Friends of the Earth US, said that "BlackRock's investments are directly causing the forest fires in the Amazon and deforestation around the globe".

"I don't believe that BlackRock and their providers are even looking at deforestation risk," he told Al Jazeera. "There are not a lot of worse companies out there than the companies on [our] list."…

 

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Item
1 August 2019

BlackRock’s Deforestation BIG Problem

Author: Amazon Watch; Friends of the Earth; Profundo

...By channeling global investment capital into the industries driving this crisis, the financial sector is instrumental in enabling the crisis, and therefore has a critical role to play in averting catastrophic outcomes, and instead financing the transition to a livable planet. Yet, the world’s largest investors have barely begun to evaluate the risks associated with their investments in the sectors responsible for driving the climate crisis. 

This paper examines the role of BlackRock, the world’s largest fund manager with $6.5 trillion USD of assets under management, in financing the global crisis of deforestation and land conflict. By evaluating BlackRock’s holdings in 167 publicly listed companies active in palm oil, cattle, pulp and paper, rubber, soy and timber between 2015 and 2018, this research documents BlackRock’s substantial exposure to deforestation and land conflict risks. The paper also considers BlackRock’s recently publicized approach to engagement in the palm oil sector, offers brief Environmental, Social and Governance (ESG) risk profiles of a subset of companies selected from BlackRock’s portfolios, and shows that BlackRock’s ESG-labeled funds contain numerous highrisk holdings in deforestation and conflict-linked securities...

2019-blackrocks-big-deforestation-problem

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