A former fund manager at Blackrock has slammed the investing giant's environmental, social and governance (ESG) strategy describing it as broken.
Terrance Keeley, a relationship manager at the fund group, said the system, designed to connect investors with good ESG practices, neither produces reliable returns nor acts as a real catalyst for change
In a new book, “Sustainable: Moving beyond ESG to Impact Investing” Keeley argues that money should be shifted away from ESG indexes and directed instead towards companies with worse ESG ratings, which would then see increased engagement and enforced change.
Some FTSE 100 bosses recently accused shareholders of ‘grandstanding’ over their ESG policies highlighting growing strains between investors and companies.
Blackrock has been the flag waver for ESG policies among investment leading to criticisms of hypocrisy and that it is using its huge portfolio to follow its own 'woke' agenda.
Keeley’s book hints at debates within Blackrock, the world’s largest asset manager, over the feasibility of the ESG model.
He retired from the firm in July having worked there for around ten years.
Larry Fink, BlackRock CEO, has frequently said that energy transition provides huge investment opportunities, something that would involve the investment company increasingly offering products which include companies with good ESG ratings.
Despite this, BlackRock recently said it would not stop fossil fuel investments, despite its prior statements championing ESG investments.
“BlackRock’s role in the transition is as a fiduciary to our clients – it is not to engineer a specific decarbonization outcome in the real economy,” when asked if it supported the International Energy Association’s (IEA) ‘no new investment’ in fossil fuels scenario.