Sierra Club Foundation Cuts Ties with BlackRock Over Failed Climate Action: What It Means for Sustainable Investment

In an interesting shift, the Sierra Club Foundation has decided to end its relationship with BlackRock/Aperio, moving its $200 million in assets to Nia Impact Capital and Xponance. The Foundation’s decision stems from BlackRock’s insufficient action on climate change risks. With annual grants between $80 million and $100 million aimed at supporting environmental and social initiatives, the Foundation’s investment decisions are both strategic and significant.

Institutional investors today face growing pressure to address the financial risks posed by climate change. A recent study estimates global damages from climate events could soar past $38 trillion each year by 2049. Presently, the world is losing about $16 million every hour to climate-related issues. Given this, aligning investments with sustainable practices is more crucial than ever.

“Climate risk is financial risk. BlackRock has not upheld its duty to long-term investors, especially in advocating for real decarbonization measures,” says Paul Rissman, a former board member of the Foundation.

Why did the Sierra Club Foundation cut ties with BlackRock? Over three years, the Foundation raised concerns about BlackRock’s direction. In May 2022, they issued a formal warning, but things didn’t improve. Some troubling points included:

• Withdrawal from the Net Zero Asset Managers Initiative.
• Support for shareholder proposals related to social and environmental issues dropped to just 4.1%.
• Climate guidelines established in 2024 were quietly weakened.
• Broken links on its website regarding “value-aligned investing” further diminished trust.

These actions led the Foundation to conclude that BlackRock was stepping back from its climate responsibilities, especially at a time when stronger commitment was essential.

The Foundation redirected its funds to two firms with strong ethics in sustainable investing:

• Nia Impact Capital, which focuses on fossil-fuel-free investments and has a track record of promoting climate solutions.
• Xponance, a Black-majority owned firm that prioritizes sustainability and equity in its investment strategies.

Both firms demonstrate a commitment to tackling climate risks, which is increasingly demanded by investors today. Ben Cushing, Director of the Sierra Club’s Sustainable Finance campaign, noted that the Foundation is setting a strong example by opting for asset managers who actively address the financial risks posed by climate change.

This decision also highlights a broader change in how investors view climate risks. Simple screenings of fossil fuel stocks are no longer enough. Research indicates that unchecked emissions could lead to a 40% decline in global equity values—a risk that needs direct action against emissions, not just diversification.

Meanwhile, BlackRock, once a leader in integrating Environmental, Social, and Governance (ESG) principles, is now facing criticism. Recent rollbacks of climate commitments have led to scrutiny from various stakeholders. Legal and political pressures from states like Texas and Florida have raised concerns that BlackRock is prioritizing short-term goals over lasting resilience.

For mission-driven investors, such compromises are unacceptable in the fight against climate change.

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