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An annual letter to investors sent by Larry Fink, the chief executive of asset manager BlackRock, says that climate change will lead to a fundamental reshaping of finance. The firm is the world’s largest asset manager, with $7tn under management.
In the letter, Fink said that a significant reallocation of capital will take place sooner than most anticipated and that BlackRock plans to make climate change central to its own investment decisions backed by immediate actions.
This shift by BlackRock comes after criticism that the company has failed to use its platform to help curb climate change.
Included in its plan to divest from thermal coal, the firm will remove the public debt and equity securities of companies that generate more than 25 percent of their revenues from thermal coal production from BlackRock’s discretionary active investment portfolios.
The company also plans to launch new investment products that screen for fossil fuels.
BlackRock will also aim to increase its sustainable assets 10-fold from $90bn today to $1tn within a decade.
Fink’s annual finger-wagging letter to chief executives has become a feature of the corporate governance calendar, often setting the agenda for global companies and shareholders alike.
Fink said the decision developed from conversations with business leaders and how they’re thinking about climate change, talking to different scientists, and reading different research articles.
Although the decision might be deemed to be cynical marketing, the move has been welcomed by environmentalists as a significant moment in the battle to reshape the relationship between money and the climate crisis.
While BlackRock takes this bold and very public stance on climate mitigation, many note the world’s second-largest asset manager—Vanguard’s silence.
It’s also important to note that Vanguard has refused to join Climate Action 100+, a group of major investors calling on fossil fuel firms to disclose how their business is compatible with climate goals.
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