Earlier this week, Saudi Aramco announced that BlackRock led a group of investors in a $15.5 billion investment in the oil & gas major’s pipeline network. This deal gives BlackRock Real Assets and its co-investors 49% ownership in Saudi Aramco’s newly formed subsidiary, Aramco Gas Pipelines Co.
In his public rhetoric, CEO Larry Fink presents BlackRock as a company committed to a goal of lowering global emissions. In reality, the investor just handed billions to a corporation that was the world’s leading upstream oil & gas producer in 2020 and that – according to the newly released Global Oil & Gas Exit List – is in the top three of oil & gas companies seeking to expand their production.
Despite scientists and economists saying we need an immediate halt to fossil fuel expansion, Saudi Aramco is planning to add a whopping 15 billion barrels of oil equivalent to its portfolio within the next seven years. That’s almost three times the national oil consumption in the United States in 2020.
The news of BlackRock successfully bidding to get in on this investment broke just weeks after Fink shared the world stage at COP to voice his concerns about our ever warming climate. Especially in light of Fink’s earlier pledges to “put sustainability at the center of the firm’s investment approach”, this gas pipeline deal with one of the world’s leading fossil fuel expansionists is a resounding slap in the face.
The science is crystal clear: fossil fuel expansion is incompatible with our attempts to limit global warming to 1.5 degrees, a goal Fink has publicly embraced in the past. Actions speak louder than words and BlackRock’s new deal with Saudi Aramco throws all of Fink’s climate rhetoric from the past 2 years into question. It seems clear that the world’s largest asset manager is not yet on the pathway the IEA and IPCC have outlined for us to stay within somewhat manageable degrees of global warming. The question now is if the financial behemoth is becoming a threat to our chances to preserve a livable climate.
Lara Cuvelier, Sustainable Investment Campaigner for Reclaim Finance, said:
“This announcement leaves BlackRock’s pretension to climate leadership in tatters. The IEA confirmed the non-negotiable imperative of climate science: no new fossil fuel projects. But this giant, gas-guzzling deal will provide Saudi Aramco with billions of dollars which will be used to accelerate its climate-wrecking plans. Aramco’s strategy to expand its reserves will alone consume 1.5% of the world’s remaining carbon budget – BlackRock is complicit. Larry Fink’s retort that BlackRock is contributing to the oil & gas major’s transition is simply untrue: leaving aside the fact that fossil gas production needs to decrease starting now, two thirds of the reserves being developed by Aramco are oil reserves. The revenue from the deal could be used to develop new oil fields – that’s not supporting the green transition, it’s sabotaging it.”
Ben Cushing, Campaign Manager of the Sierra Club’s Fossil-Free Finance campaign added:
“This bet on the future of dirty fossil fuels makes it clear that Larry Fink is still all talk when it comes to climate action. Massive fossil fuel expansion projects like this will make it impossible to avert the worst impacts of the climate crisis, and anyone who claims otherwise is either delusional or lying. Regardless of vague long-term pledges and incremental steps in the right direction, Fink simply cannot paint BlackRock as a climate leader and continue to invest in locking in climate pollution far beyond what the world can afford.”