Yahoo Finance BlackRock: World’s largest fund manager threatens to sell shares in climate crisis offenders
Climate campaigners said BlackRock’s environmental commitment allowed it to keep billions invested in thermal coal
The world’s largest asset manager has threatened to sell its shares in the worst-polluting firms unless they can demonstrate how they will reach net-zero emissions by 2050.
BlackRock, which manages about $8.7 trillion (£6.3 trillion) on behalf of savers, pledged to use its financial might to push companies to tackle the climate crisis.
In his annual letter to investors, the chairman and CEO of BlackRock, Larry Fink, wrote: “I believe that the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives.”
He added: “No issue ranks higher than climate change on our clients’ lists of priorities.”
The transition to renewable energy also presents a “historic investment opportunity”, Mr Fink said.
Under its new “heightened scrutiny” approach, BlackRock will ask companies in which it invests to explain how their business model is compatible with a shift to net zero, as well as how their board of directors review that plan. In some cases, it will look to sell investments in companies that cannot demonstrate they are aligned with the Paris Agreement.
Campaigners have long criticised Mr Fink, arguing that BlackRock should use its power over the companies in which it owns stakes to improve their environmental performance.
Climate change groups welcomed the Wall Street firm’s renewed commitment to tackling the climate crisis but expressed doubts about how effective it will be.
The majority of money that BlackRock manages is in “passive” funds that track the value of an underlying market or index, meaning they hold whatever assets make up that index.
BlackRock’s new approach will only apply to its actively managed funds. The company will remain one of the largest holders of fossil fuel assets, including stakes in companies that continue to invest in new thermal coal generation – one of the most carbon-intensive ways to produce energy.
“Larry Fink’s new net-zero commitment could be a positive step if it were paired with concrete and immediate action to stop investing in new fossil fuels," said Lara Cuvelier, sustainable investments campaigner at Reclaim Finance.
“Whilst new commitments on voting are welcome, there is no time left to engage with companies that are still actively building new coal projects, with climate scientists stating since 2015 that new coal is incompatible with the Paris objectives.”
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