Tree Hugging or Greenwashing? BlackRock’s in ESG Hot Seat Either Way

You can’t please everybody. And with ESG efforts, BlackRock is finding it increasingly difficult to please anybody.

The world’s largest asset manager is caught in the crossfire between critics who say it’s pushing environmental, social and governance initiatives too aggressively and those who insist it’s not doing nearly enough. On one side, Sen. Ted Cruz last week reintroduced the Stop TSP ESG Act, aimed at preventing managers of federal employee retirement funds from using shareholder votes to advance ESG or diversity, equity and inclusion priorities at American companies, a tactic he says could harm plan participants. The Texas Republican singled out BlackRock and State Street as the main offenders.

Also last week, but on the opposite end of the political spectrum, New York City Comptroller Brad Lander — a one-time Democratic candidate for mayor — urged the city’s pension fund to drop BlackRock, along with Fidelity and PanAgora, arguing the firms aren’t aligned with the system’s net-zero climate strategy.

Looks like the firm is stuck between a BlackRock and a hard place. (Yes, we know the pun is terrible.)

Don’t Mess with Texas

The Thrift Savings Plan, which serves more than 7 million federal employees and service members and holds over $1 trillion in assets, is at the center of Cruz’s bill. He first introduced the measure in 2023, only to see it stall in the Democratic-controlled Senate. But with Trump-era executive orders pressuring the private sector to roll back ESG and DEI initiatives and Republicans now in control of the chamber, the bill may achieve more momentum. “Americans deserve assurance that their retirement savings are being invested in the most fiscally responsible ways,” Cruz said in a statement. 

State Street declined to comment, and BlackRock didn’t respond to a request from Advisor Upside.

I ❤ NY. Meanwhile, Lander is urging New York City pension officials to re-bid $42.3 billion of public equities managed by BlackRock, claiming that the firm’s scaled-back climate engagement will wind up hurting participants. “The systemic risk of the climate crisis threatens the long-term value of New York City’s pension funds,” he said in a statement, calling climate stewardship a core fiduciary responsibility. BlackRock pushed back in a letter, describing Lander’s stance as “another instance of the politicization of public pension funds, which undermines the retirement security of hardworking New Yorkers.”