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Laxman Pai, Opalesque Asia:

The EU did not properly consider conflicts of interest when it hired the US investment manager BlackRock, the world's largest asset manager, to advise on environmental regulation for banks, the European Union watchdog said on Wednesday.

European Ombudsman Emily O'Reilly launched an inquiry after the EU executive in March appointed BlackRock, through the company's Financial Markets Advisory unit (FMA), to produce a study that would inform EU plans to integrate sustainability into banking prudential rules.

Emily O'Reilly, considers that the Community Executive "should have been more vigilant when verifying" that the fund manager, the second largest in the world, "was not subject to a conflict of interest that could negatively affect the performance of the contract." Of course, the recommendations of the European Ombudsman are not binding.

BlackRock won a tender from the EU to advise on how to integrate ESG (environmental, social and governance) issues into banking regulation in March. BlackRock has already carried out much of the work required under the contract.

The contract prompted heavy criticism from campaigners over a potential conflict of interest, given BlackRock's status as the world's largest manager of shares in fossil fuel extractors, as well as being a major investor in most of the world's biggest banks.

Ms O'Reilly said that the applicable rules were not robust and clear enough to allow officials to find co......................

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