Published 3 years ago.
About a 5 minute read.
CEO Larry Fink has called for “a fundamental reshaping of finance” in response to the climate crisis, but BlackRock remains the largest investor in fossil fuels and the companies driving deforestation around the world.
Today, Larry Fink, CEO of BlackRock issued his highly anticipated annual
letter to the CEOs of the companies in which it invests — the theme of which was
how the climate crisis should be, and already is, changing the face of finance.
As Fink asserts in the letter: “Climate change has become a defining factor in
companies’ long-term prospects. The evidence on climate risk is compelling
investors to reassess core assumptions about modern finance. … Even if only a
fraction of the science is right today, this is a much more structural,
In light of this, Fink goes on to outline a sweeping new set of policies that
aim to put climate change and sustainability at the center of BlackRock's
business model. According to the letter, BlackRock — the world’s largest asset
manager, with nearly $7 trillion in investments — will undertake “a number of
initiatives to place sustainability at the center of our investment approach,
making sustainability integral to portfolio construction and risk
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exiting investments that present a high sustainability-related risk, such as
thermal coal producers;
launching new investment products that screen fossil fuels; and
strengthening our commitment to sustainability and transparency in our
investment stewardship activities.”
The company will also “be increasingly disposed to vote against management and
board directors when companies are not making sufficient progress on
sustainability-related disclosures and the business practices and plans
While Fink has long been
on the need for social and environmental responsibility on the part of the
corporate world; climate
activists, investors, legislators
have been just as vocal about BlackRock’s continued unwillingness to put its
money where Fink’s mouth is on these issues — the asset manager still remains
the largest investor in fossil fuels and the companies driving deforestation
around the world.
But some members of the opposition found Fink’s announcement and BlackRock’s new
policies an important step in the right direction.
"BlackRock's new initiatives match the size of the crisis we're seeing in 2020
and are the direct result of an outpouring of pressure from the global climate
movement,” said Diana Best, Senior Strategist for the Sunrise Project, a
core partner of the BlackRock's Big Problem
campaign. “BlackRock beginning its shift
of capital out of fossil fuels, including today's divestment of coal in its
actively managed funds, is a fantastic start and instantly raises the bar for
competitors such as Vanguard and State Street Global Advisors. We will
be looking for additional leadership from the company in, as Larry Fink put it,
'fundamentally reshaping finance to deal with climate change,' including
additional shifts of capital out of fossil fuels."
As one of the largest shareholders in most companies, an important litmus test
for BlackRock's new climate leadership will be how it votes in the 2020
shareholder season on the many climate resolutions that have already been filed,
including at other major financial institutions.
Jeanne Martin, campaign manager at ShareAction, said: "BlackRock's coal
divestment decision is yet another significant blow to the already dying market,
yet major banks like Barclays continue to prop up coal-heavy companies. If
BlackRock is serious about its commitment to phase out thermal coal, it should
use its voting rights to get major coal financiers to do the same. Larry Fink
talks a lot about companies' purpose, but there are questions left unanswered
about what BlackRock's own purpose is; and how its stewardship delivers the
social, environmental and financial performance that its clients are looking
A 2019 report from Majority Action highlighted BlackRock's voting record and
lack of leadership on climate-related issues — it found that if BlackRock and
Vanguard had voted in favor, 16 critical climate
resolutions would have
passed at US companies in 2019.
Last week, a coalition of leading climate, youth, and Indigenous organizations
launched a major new mobilization called Stop the Money
aimed at pressure banks, insurance companies, and asset managers — including
BlackRock — to stop financing fossil fuels and deforestation and start
respecting human rights and Indigenous sovereignty.
"As the biggest financial institution in the world, BlackRock's announcement
today is a major step in the right direction and a testament to the power of
public pressure calling for climate action. But BlackRock will continue to be
the world's largest investor in coal, oil and gas,” said Sierra Club
campaign representative Ben Cushing. “It is time to turn off the money
pipeline to dirty fossil fuels for good. BlackRock should expand on its
commitments and other financial institutions should follow suit."
Today's announcement, however, did not indicate how BlackRock will address
issues related to indigenous rights or deforestation, the second-largest driver
of climate change.
Moira Birss, Finance Campaign Director at Amazon Watch, said: "This
announcement is a major step in the right direction for BlackRock. However, it
still leaves questions about how it plans to address the fact that it is the
world's biggest investor in deforestation. Will deforestation risk be part of
its new engagement and voting priorities? What about indigenous rights? The
Amazon fires last fall and the wildfires in Australia today show the immense
risk to the climate, forests and indigenous peoples that deforestation-risk
commodities pose. Consistently bad actors like Brazilian beef giant JBS
won't change without strong, concrete action from asset managers like
Published Jan 14, 2020 1pm EST / 10am PST / 6pm GMT / 7pm CET