BlackRock, the world’s largest investment fund manager, has threatened to sell shares in the worst polluters in a bid to support the 2050 net carbon dioxide emissions target.
BlackRock CEO Larry Fink said the investor will ask companies that own shares to announce their plans to achieve net zero release. The new approach is set out in Fink’s annual letter to CEOs around the world. BlackRock can then, in its actively managed funds – which represent about a tenth of its assets – deduct from polluting businesses if it does not improve.
BlackRock has a huge impact on companies, investors and governments due to the wide range of equities, bonds and other assets that his controls at the end of December were $ 8.7 ton (£ 6.4 ton). Its size makes it a major player in sustainable investment, although only $ 616 billion of its assets, approximately 7%, are managed taking into account environmental, social or management criteria.
According to Fink, the coronavirus pandemic has increased the focus on the climate crisis among investors.
‘I believe that the pandemic presented such an existential crisis – such a strong reminder of our fragility – that it has driven us to confront the global threat of climate change more strongly and to reflect on how it, like the pandemic, affects us. lives will change. , ”Wrote.
“No problem is higher than climate change on our customers’ priority lists.”
BlackRock has come under considerable pressure from environmental activists to improve its record on climate action, given its role as the largest shareholder and bondholder in the world, including large holdings in fossil fuel businesses.
The promise to support net zero by 2050 brings BlackRock in line with the commitments of more than 100 countries around the world and with some of its major competitors already promising not to invest in 2050.
Other investors went further. New York City announced Monday that two of its employees ‘and teachers’ pension funds have voted to sell $ 4 billion worth of shares in fossil fuel companies.
“Fossil fuels are not only bad for our planet and our frontline communities, they are a bad investment,” New York Mayor Bill de Blasio said.
Part of BlackRock’s promise is to play a more muscular role in dealing with the companies it owns shares, including a greater willingness to vote against boards and in favor of climate decisions and the ‘possible exit’. of companies not trying to improve. . It focuses on 1,000 companies – compared to 440 in 2020 – which together account for 90% of the emissions from BlackRock’s portfolio.
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The asset manager undertook last year to sell companies that made more than 25% of their revenue from thermal coal, but the latest decision to threaten further rejection is a stronger signal, especially for oil and gas suckers who do not ‘ have a plan for net zero. emissions.
However, the company will retain large holdings in fossil fuel businesses due to its role in providing funds that passively track investment indices, about 90% of its holdings. Even after the thermal coal pledge, BlackRock owns $ 85 billion worth of assets in coal-producing enterprises.
Environmental activists welcome BlackRock’s decision to consider taking on some of the worst climate backlogs. However, Gaurav Madan, a senior campaigner for Friends of the Earth, said his actions, including the net zero promise, were “too little, too late”.
“It does not lead to the visionary leadership we need from the world’s largest investor in deforestation of coal, oil and gas and commodities,” he said.
BlackRock says it is not its role to force customers to trade in fossil fuel producers, but it does argue that it makes it easier for customers such as pension funds and university fees to choose environmentally friendly investments rather than supporting polluters. This included new measures showing the “temperature alignment” scores for equity and bond funds, which added climate risks to the investment processes and launched new funds that matched the net zero target.