Larry Fink asks companies to prepare for a world with no emissions. The CEO of BlackRock, the largest asset manager in the world, has told the CEOs of his portfolio companies to set out their plans to reach net carbon emissions by 2050 and to show that their board has reviewed the plans.
“There is no enterprise whose transition to a net zero economy will not have a profound impact on the business model – one that emits no more carbon dioxide than it removes from the atmosphere by 2050, the scientifically established threshold required is to keep global warming well below 2ºC, ‘Fink wrote in his annual letter to CEOs on Tuesday.
BlackRock made headlines last year when it said environmental sustainability would be at the heart of its investment strategy, including the decline of fossil fuel producers. According to environmental advocates, Blackrock, with a portfolio of more than $ 7 billion, is effectively putting pressure on other financial companies to increase their own climate commitments.
“The signal is becoming indisputable to the boardroom that mainstream financing really considers climate risk to be financial risk, and it is up to them to draw up and make credible transition plans,” said Ben Ratner, senior director of EDF + Business, a partnership between the Environmental environment said. Defense fund and businesses that promise to make carbon free.
Hundreds of companies and dozens of countries have pledged to lift their carbon emissions by the middle of the century. Few, if any, have achieved the goal. For example, Alphabet’s Google unit announced in September that it had eliminated its total contribution to climate change through carbon offsets – a technique in which companies pay to reduce carbon projects, such as planting trees or catching gas leaks, to closet to help combat. gases they emit themselves.
Ratner said BlackRock’s call for specific plans could prompt companies to disclose details they have avoided so far.
“Although there has been a positive tidal wave of net-zero promises … in many cases the details are not yet available on plans to achieve it,” he said.
It is difficult for laymen to distinguish between a company that really reduces its emissions and one that simply has good marketing, Ratner added. “The [sustainable] investment landscape today is a bit wild west, ‘he said.
BlackRock itself has been proclaimed: the firm still owns $ 85 billion worth of coal-producing stock, thanks to a gap in its climate promise, the Guardian recently reported. It is also blamed for deforestation in the Amazon by its investments in companies doing business in Brazil’s most endangered natural resource.
Meanwhile, activists have accepted the sale as a way to thwart environmentally destructive projects, with 350.org founder Bill McKibben famously writing that “money is the oxygen on which the fire of global warming burns.” Universities and public pension funds followed suit, and two public pension funds in New York pulled in this week to pull out fossil fuel investments.
No less a force than the Federal Reserve has recognized the dangers of climate change, and last year identified it as a systemic risk and committed to a network of global regulators to research and policy response.
Continued decline
U.S. carbon emissions fell by an unprecedented 10% last year, the largest drop since World War II. It reflects an extremely unusual spring when industry and transit among the homeless nationwide came to a standstill. To ward off the worst effects of climate change, which have contributed to hundreds of thousands of deaths and caused billions of dollars in damage, emissions would have to be reduced by about dramatic amounts each year until 2050, while avoiding the negative economic and social consequences. of locks.
For BlackRock’s Fink, the response to the coronavirus pandemic creates a possible model for climate action.
The “pandemic has 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 consider how it, like the pandemic, will change our lives. , “Fink said. wrote. “It reminded us of how the biggest crises, whether medical or environmental, require a global and ambitious response.”
In other words, decisive action by governments is needed. Many countries, especially in Europe, have promised to meet the challenge by tying economic recovery funds to environmental measures, while activists in the US push the newly inaugurated Biden administration will move aggressively on climate.
“It’s a fantasy to think that even Wall Street could help create carbon dioxide on its own,” Ratner said. “Climate change is such a big issue that it requires governments and corporations and communities to all row together.”