Larry Fink, the Chairman & CEO of BlackRock speaks during a panel discussion/Bloombergby Bloomberg
BlackRock plans to exit investments with high sustainability-related risk as climate concerns drive a sweeping change in the way the world’s largest asset manager invests its $7 trillion in assets.
Larry Fink, Chief Executive Officer of BlackRock, said, “Climate change has become a defining factor in companies’ long-term prospects, awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”
Fink is tackling the subject as asset managers come under greater pressure on sustainability and climate change. BlackRock has been moving toward a more public stance on climate, as activists and non-profit groups increasingly scrutinise the firm’s behaviour and voting record around environmental issues.
The chief outlined a number of initiatives such as making sustainability integral to portfolio construction and risk management, exiting investments that present a high sustainability-related risk as well as launching new investment products that screen fossil fuels and strengthening the firm’s commitment to sustainability and transparency in its investment stewardship activities.
Earlier in January, BlackRock joined Climate Action 100+, a group of more than 370 investment managers with a combined $41 trillion in assets. The campaign’s members are pressuring the world’s biggest emitters of greenhouse gases to reduce their environmental impact and disclose more information on how climate change will affect their businesses.
According to its 2019 investment stewardship report, the firm also listed environment and climate risk among its top priorities for meetings and discussions with the public companies it owns.
Previous, Fink’s underscored the theme that profit and social purpose are inextricably linked. People are looking to corporate executives to step in and offer fixes to social problems that governments are failing to solve, said Fink.
Activists have been calling on BlackRock to do more around the climate crisis. Groups including Amazon Watch, the Sunrise Project and coalitions of youth activists and parents have all targeted the firm, asking for more action around the global crisis of climate change.
BlackRock’s size puts it in a delicate position—operating in more than 30 countries and as one of the biggest holders of most US publicly traded companies, its clients include large sovereign wealth funds, state pension plans and financial advisers with viewpoints that do not necessarily align on what to do about climate change and social justice issues.