Evolving ESG Landscape Leads to Changes at Mutual Funds and Rating Agencies – Governance & Accountability Institute

Market Dynamics Driving ESG Evolution

Market forces, including shifting ESG regulations, U.S. anti-ESG sentiment, and increasing competition among ESG service providers, are reshaping asset managers and rating agencies’ ESG integration.

BlackRock’s New Approach

BlackRock, the world’s largest asset manager, is adjusting its engagement and voting strategies on climate issues. The firm’s CEO, Larry Fink, has moved away from publicly using the term ESG due to political backlash but continues to manage over $800 billion in ESG-designated assets. BlackRock recently introduced “Climate and Decarbonization Stewardship Guidelines” for funds focused on low carbon transition, while maintaining a broader engagement policy for other clients. The new policies will prioritize voting and engagement activities on sectors and companies critical to the transition to a low-carbon economy, while the benchmark policy will consider climate-related risks and opportunities where material to long-term financial returns.

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