What is BlackRock, the investment giant supercharging New Zealand's green energy sector?
When Prime Minister Chris Hipkins on Tuesday revealed the Government had worked with BlackRock to create a new $2 billion fund for renewable energy, conspiracy theorists once again took to their keyboards. It wasnt the first time New Zealand had got caught up in it all, with Jacinda Arderns visit to the firm last May in New York, causing a social media stir with conspiracy theorists going into overdrive, some linking the former prime minister to an incoherent global plot with BlackRock and the World Economic Forum. The intensity of claims were such that BlackRock debuted an ad campaign in the US to explain who it was and what it does, to combat misinformation and the conspiracy theories. BlackRock is the worlds largest investment and risk management firm with $10trillion of assets under its management. It was started in 1988 in New York, before ballooning to a franchise which spans the globe. In 2012, it launched a climate infrastructure business which develops investment strategies to promote climate solutions. Its chief executive and co-founder Larry Fink, a New York-based billionaire, is seen to be at the forefront of ethically-responsible investing and business practices, called ESGs. This has made him a politically controversial figure, who is attacked by both the left and right. Republican politicians have argued the corporate worlds focus on climate change and social injustice is an overreach, claiming business leaders are trying to push what they describe as a liberal agenda. Florida even banned it from managing state funds. Its state chief financial officer, Jimmy Patronis, said the firm was on a campaign to change the world, according to the Washington Post. Meanwhile, Democrats have defended it and at-times argued it does not go far enough. The firm will now be looking for institutional investors into the New Zealand net zero fund. It has set a $2bn target. An institutional investor is a business that invests money on behalf of its clients. The capital, or wealth, raised will be used to accelerate investment in solar, wind, green hydrogen and battery storage to supercharge the Governments efforts to become one of the first countries in the world to reach 100% renewable electricity by the end of the decade. New Zealand's electricity grid already runs off between 80-85% renewable energy. It is a significant first step in a new direction in economic investment, and means investors can profit and drive the transition to more renewable energy. Fink said it was the largest low-carbon transition investment initiative for a single country the firm had ever created. It will enable New Zealand companies to access greater pools of capital to build out climate infrastructure across the countrys energy system including in wind power, solar power, battery storage, electric vehicle charging, and natural capital projects, he wrote in a LinkedIn post. The world is looking for models of cooperation between the private and public sectors, he added, to ensure an orderly, just, and fair energy transition. Building on BlackRocks Climate Finance Partnership fund announced at COP26 in Glasgow, the New Zealand climate infrastructure strategy can be a model for how to scale and implement this vision. BlackRock features in global world order conspiracies because it holds shares in many of the most successful companies, and some of its former senior executives work in powerful positions including in the Treasury Department in the US. Conspiracy theorists posit Fink and the firm have a huge amount of control over the companies they have shareholdings in. However, they only invest the money into companies on behalf of their clients, who ultimately own the shares. Another aspect is that in the US, Fink is seen as a leading figure in the movement pushing companies to confront global warming and social injustice - two issues at the heart of the so-called culture wars. Fink wrote, in his annual open letter to chief executives, of the risk climate change poses to the insurance sector and economies in 2020. Climate risk is investment risk, he said. What will happen to the 30-year mortgage a key building block of finance if lenders cant estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts? Despite his entreatments, the German NGO Urgewald found BlackRock is the worlds second-biggest investor in fossil energy, and the largest financial firm investor in coal developers.