BlackRock’s CEO Larry Fink likes to talk a big game on the company’s efforts to expand “environmental, social and governance” (ESG) investing. But the company itself is not living up to the standards it demands of others. Primrose Riordan and Stefania Palma report in The Financial Times:
BlackRock has been accused of inconsistency for supporting a shareholder protest against Procter & Gamble’s sourcing of palm oil from an Indonesian company in which BlackRock itself holds a significant stake.
The world’s biggest investment group, which has made ambitious commitments to environmental, social and governance standards, joined an investor rebellion at P&G in October over the consumer goods group’s wood pulp and palm oil supply chain, which extends into Indonesia.
P&G has since asked its Singapore-based supplier Wilmar International to investigate Astra Agro Lestari, a palm oil subsidiary of Indonesian conglomerate Astra International that activists have accused of seizing land from local farmers, among other poor environmental standards.
Rights groups and sustainable investment advocates have now turned their attention to BlackRock, which is a significant shareholder in Astra International. According to Bloomberg data, the US fund group is Astra International’s third-largest investor, with a holding worth almost $350m. It also has a small direct holding in Astra Agro Lestari.
Green finance groups said BlackRock had been inconsistent in its approach to ESG considerations by not openly pressing Astra over its environmental record. The $8.7tn fund house has come under increasing pressure to live up to its 2020 pledges regarding ESG and sustainable investing.
“It’s incoherent that BlackRock is pushing P&G to clean up its value chain while simultaneously continuing to profit from this same value chain,” said Lara Cuvelier, sustainable investments campaigner at Reclaim Finance, an investor lobby group.
BlackRock should “make time-bound and detailed requests to the company . . . and commit to divesting if the requisite changes are not forthcoming”, Cuvelier added.
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