BlackRock and the European Commission: green policy, grey areas
Critics of the US firm’s appointment to consult on integrating ESG into EU banking regulation have welcomed a damning report by the bloc’s ombudsman. But does it miss the point?
When the European Commission announced in April that it had hired BlackRock to produce a report on integrating environmental, social and governance (ESG) considerations into banking regulation in the European Union, it prompted an immediate and predictable storm of criticism.
Those for whom the US firm is the new global capitalist bogeyman were horrified at the idea of it being given access to the inner workings of European policymaking.
Civil society groups and members of the European parliament cited BlackRock’s ownership – through its investment funds – of large holdings in fossil fuel producers, as well as most of Europe’s biggest banks, as proof that the company could not be trusted to be objective on ESG issues.
BlackRock’s claims that the entity undertaking the work – a consultancy division known as Financial Markets Advisory (FMA) – was separated by an “information barrier” from the rest of the firm also received short shrift from opponents of the contract.
They noted that when the Federal Reserve signed up the FMA unit to manage its Covid emergency corporate bond-buying programme in March, the contract specifically acknowledged that some BlackRock executives would “sit atop” the barrier.
Even more worrying, for those suspicious of BlackRock’s motives, was the fact that the firm effectively took a €250,000 pay cut for the work.