BlackRock has been reported to France’s markets regulator by nonprofit ClientEarth, which alleges the asset manager is making misleading sustainability claims about some of its funds.
The report, which ClientEarth says was filed on Oct. 16, alleges that the world’s largest asset manager is marketing 18 investment funds as sustainable, even though they’re not. The funds in question contain fossil-fuel companies that are developing new projects or production capacity, or that aren’t phasing out production consistent with the Paris Agreement, according to the nonprofit.
The ClientEarth objection won’t necessarily lead to a formal probe by the French regulator. The assets targeted in the report, marketed in France, make up a combined $1 billion, according to ClientEarth.
“We believe the problem of misleading investment-fund marketing on sustainability issues is systemic,” Alex Bennett, a lawyer at ClientEarth, said by email. “We hope this complaint puts the industry as a whole on notice.”
A spokesperson for BlackRock said the firm’s funds “are managed in accordance with their investment objectives, that are clearly disclosed in each fund’s prospectus and on BlackRock’s website.” The spokesperson added that the “sustainable funds are managed in line with applicable regulations governing sustainable investing.”
France’s markets regulator — Autorite des Marches Financiers, or AMF — declined to comment on whether it has received a grievance from ClientEarth. Instead, AMF said it always makes sure to “study carefully” all letters and reports that it receives.
ClientEarth's report on BlackRock marks the first time the nonprofit has formally targeted the asset manager.
The group has so far prevailed in an ongoing case brought against the U.K. government for not living up to its Climate Change Act. It did, however, have an attempt to sue Shell's board for its lack of climate ambition tossed out by a London judge.
Environmental lawsuits are climbing as activists increasingly pin their cases to the Paris climate agreement, struck in late 2015. Since then, close to 1,900 cases have been filed, according to a June report by the the Grantham Research Institute on Climate Change and the Environment. The number is expected to grow due to new regulations such as Europe’s requirement for companies to document how they plan to transition to a low-carbon future, known as the Corporate Sustainability Due Diligence Directive.
