BlackRock, the world's largest asset manager, has withdrawn from a major climate change initiative amid mounting pressure from Republican politicians and regulatory scrutiny.

The $11.5 trillion investment firm announced its departure from the Net Zero Asset Managers initiative (NZAMI), a group of more than 325 signatories managing over $57.5 trillion in assets who pledge to support net zero greenhouse gas emissions by 2050.

In a letter to clients, BlackRock stated that while two-thirds of its global clients remain committed to reducing emissions, membership in climate organisations had "caused confusion regarding BlackRock's practices and subjected us to legal inquiries from various public officials."

The move follows similar withdrawals by major US banks from climate alliances, as Wall Street firms respond to increasing criticism from Republican legislators who claim such environmental commitments represent "woke capital" and potentially violate antitrust laws.

In December, the Republican-led US House of Representatives Judiciary Committee chairman Jim Jordan celebrated BlackRock's exit as "a huge win for freedom and American prosperity," urging other financial institutions to "abandon the climate cartel and woke ESG policies."

The departure comes as BlackRock faces legal challenges from Texas and 10 other Republican-led states, which claim the firm's environmental activism has reduced coal production and increased energy prices. BlackRock has denied these allegations, stating that the lawsuit "discourages investments in the companies consumers rely on."

Leslie Samuelrich, president of Green Century Funds, expressed disappointment in the decision: "This is short sighted given the stark realities of climate change and the need to push for environmentally responsible actions in corporate America."

Despite its withdrawal, BlackRock emphasised that the decision would not affect its investment approach. The firm stated its "sustainable-investment efforts are driven by the needs of our clients and our continued investment conviction that the energy transition is a mega force shaping economies and markets."

While some major financial institutions like State Street and JPMorgan's asset management arms remain NZAMI members, BlackRock's departure marks a significant shift in Wall Street's environmental positioning. The move comes ahead of the anticipated return of Donald Trump to the US presidency and as Republicans take control of Congress, signalling a potential broader retreat from climate-focused initiatives in the financial sector.

The announcement comes as California battles its most devastating wildfires in history, with more than 10,000 structures destroyed across Los Angeles and at least 10 people dead. Kevin McGowan, director of emergency management for Los Angeles county, called it "a historic natural disaster," as fires continue to rage across multiple neighbourhoods including Pacific Palisades and Altadena, forcing 180,000 people to evacuate.

---