Environmental law firm ClientEarth has lodged a complaint against investment giant BlackRock in France, alleging that the firm is misleading customers by investing funds labelled as ‘sustainable’ into fossil fuel companies. According to ClientEarth, BlackRock has directed more than $1 billion to energy companies involved in new oil and gas projects through 18 funds marketed as ‘sustainable.’
Among the beneficiaries of these investments are major oil firms like TotalEnergies, Shell, BP, Chevron, ConocoPhillips, and Equinor. While these companies have made some investments in energy transition technologies, the International Energy Agency (IEA) estimates that oil and gas producers collectively allocate less than 3% of their investments to renewables and electric mobility.
In a statement ClientEarth said, “We know that investors in France and elsewhere want to take sustainability into account in their investment choices – including fossil fuel expanders in ‘sustainable funds’ stops them doing that and undermines the integrity of the market for sustainable financial products.”
ClientEarth has filed the complaint with France’s financial regulator, the Autorité des marchés financiers (AMF), and notified the European Securities and Markets Authority (ESMA). The organization claims that exaggerated sustainability claims give BlackRock an unfair competitive advantage by diverting capital from genuinely sustainable investment products.
ClientEarth lawyer Megan Clay stated, “Exaggerated sustainability claims create a competitive advantage for these BlackRock funds, distorting competition in the market and diverting capital flows away from genuinely sustainable products.”
The legal group is pushing for BlackRock to either modify the language used in marketing its ‘sustainable’ investments or to reallocate the funds to genuinely sustainable activities as understood by the public. ClientEarth also seeks a broader resolution to tackle greenwashing in the investment sector, advocating for the AMF to establish a precedent for fund labelling standards in France.
The outcome of the complaint now lies with the AMF, which will decide how to proceed.
In response, a BlackRock spokesperson told the media, “Our funds are managed according to their investment objectives, which are clearly outlined in each fund’s prospectus and available on BlackRock’s website. BlackRock’s sustainable funds are managed in compliance with applicable regulations governing sustainable investing.”
In his most recent annual letter to investors, BlackRock CEO Larry Fink defended the company’s approach, advocating for “energy pragmatism.” He argued that investing in both new fossil fuels and clean energy is essential for maintaining energy security, citing examples from Germany and Texas where balanced investments have driven energy transitions.
Fink emphasised that the world still requires both oil and gas alongside renewables in the short term, noting that the path to decarbonisation for many countries will continue to involve hydrocarbons for some time.
However, the International Energy Agency’s roadmap to net-zero emissions calls for an immediate halt to new oil and gas projects with long lead times, as well as the cessation of new coal mines and coal-fired power plants that lack carbon capture technology. Gas-fired power generation must peak and start a long-term decline by the late 2020s to meet global climate goals.
While Fink acknowledged that decarbonisation and energy security could complement each other, he also recognised that many see them as competing priorities.
