How BlackRock Helped Stack Exxon’s Board With Climate Radicals

A recent House Judiciary Committee report details how America’s largest financial institutions, colluding with climate activists, imposed radical environmental policies on the American economy, subverting both our self-government and free markets. It focuses on the successful effort to insert climate activist directors on the board of energy giant ExxonMobil. 

According to the report, there is “substantial evidence of a ‘climate cartel’ of financial institutions” including the “Big Three” asset managers (BlackRock, State Street, and Vanguard), several massive state pension funds, European investment firms, and the two foreign-owned proxy advisory firms that dominate the American market.

This cartel coordinated its efforts through a network of “alliances” that included “left-wing environmental activist” groups such as the Glasgow Financial Alliance for Net Zero and The Net Zero Asset Managers initiative (NZAM). The Big Three belonged to both.

The cartel made Exxon a “focus company” on its “climate blacklist,” subjecting Exxon to “a barrage of shareholder pressure campaigns — more than any other company in the world” — all designed to force Exxon to reduce its fossil fuel production. 

The Big Three’s support was “crucial” to the success of this effort. Combined, they owned 20.5 percent of Exxon’s shares. The cartel believed that was enough “clout to change outcomes.” As it turned out, it was. 

In 2021, the cartel used a fledgling activist hedge fund called Engine No. 1 to nominate environmentalists to replace Exxon board members. At first, people thought it was a joke. It wasn’t. BlackRock voted for three of the nominees. State Street and Vanguard voted for two. All three climate activists were elected to Exxon’s board. 

Then it got worse. As absurd as it sounds, within less than a year, Exxon — our nation’s largest and most profitable oil company — adopted a policy of net zero carbon emissions by 2050. So America’s preeminent oil company now supports severely reducing if not eliminating the very product that justifies its existence. Why would Exxon do that? 

Well, not because the people’s elected representatives voted to enact such a self-destructive policy. Despite extreme media and activist pressure, there is no legislation requiring Exxon to adopt a net zero policy — because it’s a ridiculous thing for an oil company to do, and many Americans do not support it. 

Nor was there a lack of consumer demand for Exxon’s products. On the contrary, the demand for oil is accelerating worldwide. 

Nor was it in the best financial interests of Exxon’s actual shareholders (the Big Three’s investor clients) for Exxon to pursue climate commitments at the expense of its most profitable products. 

It happened because the Big Three used the power they derive from investing other people’s money to force compliance with a radical political goal, overriding both our self-government and our consumer-driven free market economy. 

But what about the Big Three’s fiduciary duty to invest solely in their clients’ best financial interests? Even lawyers affiliated with the environmental activist group Climate Action 100+ — of which both BlackRock and State Street were members — thought that “the economic and social costs” of Paris Agreement compliance “are so high” that they do not align with the fiduciary duty that asset managers owe their clients. 

On the upside, the Exxon vote brought the cartel’s radical climate activism out in the open. Not surprisingly, people reacted. State legislators passed fiduciary duty legislation. Republican AGs sent letters to the Big Three, alleging that they had violated their fiduciary duties, and Tenessee filed a lawsuit against BlackRock. Eleven states filed an antitrust case against the Big Three. And now we have the House Judiciary Committee finding of “substantial evidence of collusion and anticompetitive behavior” with the Trump administration about to take office. 

Perhaps coincidentally, in recent weeks there has been an exodus by major U.S. financial companies from climate activist groups, including BlackRock’s recent withdrawal from NZAM. If you’re wondering how important BlackRock was to this effort, within days, NZAM suspended its operations. 

BlackRock now claims its NZAM membership “caused confusion regarding BlackRock’s practices and subjected [it] to legal inquiries from various public officials” but didn’t really affect how it “manage[d] [clients’] portfolios.” 

That’s hard to believe, but the good news is that if it’s true, BlackRock will have plenty of opportunity to prove it — in the lawsuits it’s up against, in future congressional investigations, and before the Trump administration officials tasked with enforcing antitrust laws and the fiduciary obligations imposed by ERISA. 

Will there be a meaningful change in the Big Three’s environmental activism? They each issue updated proxy voting guidance in the spring. BlackRock’s is already out. This year’s guidance will be worth a close read. 

Andy Puzder was chief executive officer of CKE Restaurants and is currently a distinguished fellow at the Heritage Foundation and a senior fellow at both the America First Policy Institute and the Pepperdine University School of Public Policy. His new book, “A Tyranny for the Good of its Victims – The Ugly Truth About Stakeholder Capitalism,” came out on Jan. 14 and is available on Amazon.