BlackRock’s Carbon Transition Fund is swimming in Big Oil

The BlackRock US Carbon Transition Readiness exchange-traded fund (ETF) (LCTU) launched last week. It broke records on its first trading day with $1.25 billion invested. But there’s a big problem with this ETF: It’s jam-packed with Big Oil companies.

BlackRock’s fund contains Big Oil

As the Fossil Free Funds website points out, BlackRock’s fund includes major oil and gas companies, including Exxon, Chevron, ConocoPhillips, Marathon Petroleum, and Devon Energy; fossil-fired utilities, including Berkshire Hathaway, Consolidated Edison, and UGI; and oil field services and pipeline companies, including Kinder Morgan, Baker Hughes, and Schlumberger.

In addition, the ETF is invested in companies involved in rainforest destruction, which are identified on fund transparency tool Deforestation Free Funds. As of this month, BlackRock’s LCTU holdings receive a C grade for deforestation and a D on Fossil Free Funds.

Andrew Behar, the CEO of nonprofit organization As you Sow, which promotes environmental and social corporate responsibility, said:

If this ETF is really named ‘Carbon Transition Readiness,’ then I have to ask, What we are transitioning to and what we are getting ready for?

BlackRock can do better. Investors who bought this fund thinking that the holdings are actively working on climate transition need to take a much closer look. Based on our analysis, this ETF ignores [BlackRock CEO] Larry Fink’s statement, ‘Climate risk is investment risk,’ while doubling down on business as usual.

As more and more investors put their dollars into ESG funds, the names and transparency are critical.

Electrek’s Take

In January 2020, BlackRock announced that it would launch new investment products that screen fossil fuels. At the time, Electrek reported that some environmental groups were skeptical about BlackRock’s announcement of this and its decision to no longer invest in thermal coal. It looks like their skepticism was warranted.

Larry Fink says all the right things. BlackRock assets under management hit a record $8.68 trillion in the quarter ended December 31, 2020. It’s time for such a powerful investment management company to stop the greenwashing. Investors who are keen to reduce the climate risk deserve transparency, not lies.