BlackRock rebukes Siemens on its environmental record

BlackRock has rebuked Siemens over its role in a controversial Australian coal-mining project, in a rare intervention from an asset manager that has come under increasing fire for failing to hold companies to account on issues such as climate change.

The world’s largest asset manager said on Thursday that one of Germany’s largest industrial companies had failed to fully consider the “breadth of risks” of an infrastructure deal at the A$2bn Carmichael coal mine in Queensland.

In December, Siemens signed an €18m contract to provide rail signalling systems for Carmichael, which quickly became a lightning rod for environmental activists and sparked a global campaign to force the company to pull out of the agreement.

The management of Siemens, which has frequently touted its green credentials, needed to step up their risk assessments around environmental, social and governance issues, BlackRock said in its first intervention since the $7tn asset manager issued a policy on sustainability last month.

“While [Siemens] followed its internal review process for the project, it is nevertheless clear that it requires a more thorough review of the potential risks, including ESG risks, presented by future projects,” the asset manager added.

The criticism comes a day after Siemens’ annual meeting in Munich, which was dominated by speeches from irate institutional investors, as well as teenage climate activists from Germany and Australia.

Joe Kaeser, Siemens’ chief executive, who has previously said that the company should never have signed the Carmichael deal, told the meeting that management had “failed to see the overall picture”.

BlackRock will hope that its criticism of one of Europe’s largest industrial groups shows that it is prepared to take a tougher line with companies it believes are failing to take sustainability risks seriously enough.

Despite the intervention, BlackRock, which is led by chief executive Larry Fink, faced criticism on Thursday for backing all management resolutions at the meeting, although no specific climate-related motions were put forward.

BlackRock “voted in favour of CEO Joe Kaeser and the Siemens board. This clearly exposes Larry Fink’s pledges to promote sustainability as blunt greenwashing,” Greenpeace Germany said in a statement.

On the eve of Siemens’ meeting, protesters had targeted BlackRock’s Frankfurt headquarters. A large model rock representing coal was ignited by the protesters in front of banners proclaiming “Stop Adani” and “BlackRock: your assets are on fire!”

Last month Mr Fink said that the asset manager would put sustainability at the centre of its investment process because of the financial risks of climate change. It announced plans to dump some coal holdings, require businesses to disclose climate-related risks and said it would disclose more information on its conversations with businesses over climate change, as well as provide more timely updates on its voting record on climate change and other issues.

The New York fund group last month joined the Climate Action 100+ group, which urges big businesses to reduce their environmental impact.

Mr Fink, speaking at Davos last month, said his role at BlackRock was to help clients prepare for the redistribution of capital, adding he would do that as a “capitalist” and not an “environmentalist”.

In April last year, BlackRock refused to back the board of German pharmaceutical group Bayer at the company’s annual meeting, in a largely symbolic protest over its handling of a merger with pesticides-maker Monsanto. Legal claims in the US had wiped tens of billions of dollars from Bayer’s value in the run-up to the meeting.

Additional reporting by Chris Flood