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- ClientEarth takes legal action against BlackRock, accusing the investment giant of misleading investors by labeling fossil fuel-backed funds as “sustainable.”
- Complaint filed with French financial regulator, targeting over $1 billion in BlackRock’s ‘sustainable’ funds invested in companies like Shell and BP.
- The outcome could set a precedent, pushing for stricter regulations on the marketing of sustainable investment products.
BlackRock Under Scrutiny for ‘Sustainable’ Investments
ClientEarth, an environmental law organization, has taken legal action against BlackRock, the world’s largest asset management firm, for alleged greenwashing. The complaint, filed with France’s Autorité des marchés financiers (AMF), accuses BlackRock of misleading investors by labeling investment funds as “sustainable” despite significant investments in fossil fuel companies.
The Greenwashing Allegations
With over $9 trillion in assets, BlackRock is a major player in global finance. However, ClientEarth claims that BlackRock’s so-called “sustainable” funds have invested more than $1 billion in fossil fuel giants such as Shell, BP, Chevron, and others that are actively expanding their fossil fuel projects. ClientEarth contends this practice amounts to greenwashing, where companies use deceptive marketing to appear more environmentally friendly than they are.
“Through BlackRock’s so-called ‘sustainable’ funds, investors are unwittingly being exposed to billions in fossil fuel investments, distorting competition in the market for truly sustainable financial products.” – Megan Clay, ClientEarth lawyer
What Is Greenwashing?
Greenwashing occurs when a company falsely portrays its products or services as environmentally sustainable, masking its true environmental impact. In BlackRock’s case, ClientEarth argues that the company is exploiting the label “sustainable” while continuing to finance companies that contribute to climate change through fossil fuel expansion.
The Legal Action
ClientEarth’s October 2024 complaint is the first against a financial institution for greenwashing. The complaint highlights 18 retail investment funds in France marketed as “sustainable” by BlackRock, despite their considerable investments in fossil fuel companies. ClientEarth’s action aims to clarify what “sustainable” really means in financial product marketing and ensure transparency for investors.
What ClientEarth Hopes to Achieve
ClientEarth is pushing for:
- Enforcement by financial regulators to ensure that investment funds labeled as “sustainable” genuinely align with that description.
- BlackRock to change its marketing practices or adjust its investment portfolios to truly reflect sustainable investing.
- Global regulatory attention, urging other financial institutions and regulators to scrutinize how “sustainable” funds are marketed and managed.
“We want other investment managers to heed this warning and for regulators worldwide to ensure sustainable funds are genuinely sustainable.” – ClientEarth
Next Steps
The complaint has been filed with the AMF, and ClientEarth will also notify the European Securities and Markets Authority (ESMA). The regulator now holds the power to investigate and enforce necessary changes. If successful, this case could set a new standard for sustainable finance, improving clarity for investors and ensuring that funds marketed as “sustainable” truly reflect environmental responsibility.