The European Green Deal aims to make Europe carbon neutral by 2050. But as Kieran Logan explains, an appointed advisor in delivering the Deal – BlackRock – is the “biggest driver of climate destruction on the planet”.
The European Commission unveiled its European Green Deal in October 2019, aimed at making Europe carbon neutral by 2050. With typical EU fanfare, the president of the European Commission, Ursula von der Leyen, stated that the Green Deal would be Europe’s “man on the Moon moment” and vowed to “leave no-one behind” in reaching its targets.
The European Parliament supported the deal in January 2020, requesting that the EU show even greater ambition. However, as further details of the scope of the deal emerged, it was met by widespread dismay from environmental campaigners. Greta Thunberg’s Fridays for Future, Greenpeace EU, and the Climate Action Network all denounced the plan. Thunberg slammed the deal, declaring, “You are giving up”.
As environmental movements have grown, so too has the phenomenon of greenwashing. Greenwashing is a form of marketing spin in which green environmental values are used deceptively, to persuade the public that an organisation’s products, aims and policies are environmentally friendly. It is also used to give cover for a company’s nefarious environmental or social practices by allowing them to hide behind a ‘green’ façade.
On April 8, it was announced that the European Commission had appointed BlackRock as an advisor in formulating its Green Deal and awarded it a contract to draft a key piece of its infrastructure. By involving BlackRock, it has become abundantly clear that with the Green Deal, the EU intends to go no further than engaging in an enormous greenwashing exercise, not even managing one small step to protect our endangered environment.
Who is BlackRock?
BlackRock is the biggest investment management company across the globe, with more than $7.4 trillion in assets at the end of 2019. BlackRock’s market capitalisation is more than $84 billion (that is, if you wanted to buy all of the company’s shares at once, it would cost you $84billion).
The corporation is, deliberately and misleadingly, also known as Blackstone, and will be known to many Irish students through its sponsorship of Launchpads in NUI Galway, University College Cork and Trinity College, Dublin – part of its ‘philanthropy’ efforts.
BlackRock has a long history of lobbying against any climate progressive legislation considered by governments and the EU. It has opposed over 80% of climate-related shareholder motions of fossil fuel companies between 2015 and 2019. Incidentally, BlackRock is the largest investor in weapon manufacturers through its iShares U.S. Aerospace and Defense fund.
BlackRock’s environmental credentials
In September 2018, a number of environmental groups including Friends of the Earth, the Sierra Club and Amazon Watch got together and launched a campaign called BlackRock’s Big Problem, detailing how BlackRock is the “biggest driver of climate destruction on the planet”. The campaign has highlighted that BlackRock is the largest, or one of the largest, investors in:
- Fossil fuel companies
- New coal plant development and existing coal reserves worldwide
- Oil and gas companies
- Rainforest destruction, including in the Amazon and Indonesian rainforests
- Pipelines, palm oil plantations, tar sands and coal mines
BlackRock likes to claim that it is simply an investor in these companies, that its ownership doesn’t count, and that it has no responsibility for the companies it invests in. However, that assertion is complete nonsense, as BlackRock uses its clout to prevent corporations from acting a greener manner.
It has voted against 46 of 52 environmentally progressive motions at shareholder meetings. It refuses to divest itself from companies that are worsening the climate with their activities. What, you might ask, are a company like BlackRock doing at the centre of Europe’s most important climate initiative, our “man on the Moon moment”?
BlackRock’s role in the Green Deal
The European Commission announced that “BlackRock will develop tools and mechanisms for integrating ESG into banking regulation”.
ESG criteria are a set of standards for a company’s operations that investors can use to rank or grade potential investments along Environmental, Social and Governmental grounds, and ESG taxonomy is a method for scoring or ranking a particular company or project.
The Environmental criteria consider how a company performs as a steward of nature. The Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. And finally, the Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
For example, an airline is likely to score poorly on environmental criteria given its dependency on fossil fuels and may also score poorly on social criteria if one or more of its suppliers are similarly dependent.
Understanding the difference between a public and private ESG taxonomy is important. The European Commission has developed its own public ESG taxonomy. It was completed relatively recently, on 9 March 2020, and anyone can download the completed final report from the EU website as well as the taxonomy tools themselves. The stated purpose of this public taxonomy is to prevent the greenwashing that inevitably happens via private ones.
A private ESG taxonomy is, as you might expect, private. Companies and organisations can pay to have their own taxonomy done, and the resulting score and how it was arrived at cannot be examined in any detail. In other words, you can get the ESG rating you pay for.
In the Green Deal proposal, future projects have no mandatory enforcement to use the public EU taxonomy; an ESG “rating” can be acquired via a public or private ESG. Inevitably, the decision to allow this choice will lead to even more greenwashing, not less, as was the stated intent from the EU. Unsurprisingly, BlackRock are a world leader in greenwashing, and will have a decisive role in how companies and projects under the Green Deal will score along ESG lines.
A Win for BlackRock
Worse still, under the Green Deal, companies can now avail of EU subsidies or bonds for ‘green’ finance – even called a “a complete fraud” by some well-known venture capitalists. A very real danger has now been created where public money, which the European Commission had promised to put into greening the European economy, will now be used to merely subsidise greenwashing.
The appointment of BlackRock will result in an enormous waste of public money as the EU’s own existing public taxonomy will be side-lined. It is mind-boggling that the European Commission is handing the keys to the green finance regulatory kingdom to BlackRock, a renowned greenwasher, and paying it €280k for “developing tools and mechanisms for integrating ESG into banking regulation”. That the EU would trust BlackRock to set aside the interests of its other clients whose huge wealth they manage is simply not credible.
The timing of all this is interesting. The agreement was reached by European Commissioners on April 8, at a time when everyone’s attention was understandably diverted to a global pandemic. Of equal interest is that the decision was made at European Commission level and not brought back to the EU Parliament for consideration.
Many EU Parliamentarians have taken to social and mainstream media to vent their anger at the appointment of BlackRock and the role it has been granted. They have also expressed their disgust at the undemocratic, underhanded means by which the appointment was considered and approved.
Another large stumble for the environment
BlackRock’s involvement also raises the general question of the EU’s targets under the Paris Agreement.
The EU is a signatory to the global agreement, including the aims of “holding warming well below 2°C, and pursuing efforts to limit warming to 1.5°C.” which came into effect in 2016. To date, the EU has failed to meet any of the annual goals and while significant improvements have been made in reducing pollutants, those achievements have been matched by unparalleled destruction of biodiversity.
The EU has long claimed to have had the potential to be the driving force in persuading, educating, and delivering long overdue policies to fully and finally secure our environment for current and future generations. If COVID-19 has taught us anything, it is that we need to rapidly accelerate our regulatory environmental efforts. Instead, the Green Deal does little or nothing to mitigate the impacts of climate change.
The announcement that BlackRock was given a seat at the Green deal table is a news item that barely made a ripple in the media. The EU has dealt a serious body blow to anyone hoping the Green Deal would amount to something of substance. In reality, the Green Deal is nothing more than lip service and a vehicle to divert public money to large corporations.
Losing “new” from the US’s Green New Deal is a signal that the commission is not looking for system change and has no intention of rocking the boat with ambitious green policies or tougher regulation of carbon financiers. Instead, it is business, and politics, as usual. In truth, it is engaging in the greenwashing of itself.
Ursula von der Leyen promised us a Green Deal that would be Europe’s “man on the Moon moment”. Instead of fulfilling her promise, she has delivered not “one giant leap for mankind” but a substantial stumble into an increasingly bleak future.