World’s Largest Fund Manager to 'Reshape' Investment Portfolio to Consider Climate Crisis, Sustainability
BlackRock, an investment fund that manages nearly $7 trillion, will "reshape" its strategy toward investments that support environmental sustainability, according to a letter to investors from its founder and Chief Executive Larry Fink, as The New York Times reported.
In the letter, Fink wrote, "Climate change has become a defining factor in companies' long-term prospects … But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance. The evidence on climate risk is compelling investors to reassess core assumptions about modern finance."
BlackRock's assets include massive investments in fossil fuels, including big oil producers such as BP, Shell and ExxonMobil. The investing giant has drawn the ire of environmentalists by routinely dismissing the climate crisis and voting against shareholder actions to direct corporate boards to address the growing climate emergency, as The Guardian reported.
Activists hailed the new declaration that the climate crisis will steer BlackRock's future investments. Bill McKibben, the founder of 350.org, which campaigns for divesting from fossil fuels, wrote on Twitter, "Biggest news in a long time. After a ton of pressure, Blackrock — which owns more fossil fuel stock than anyone on earth — announces it will put 'climate change at the center of its investment strategy.' A huge — if by no means final — win for activists!"
The ton of pressure McKibben referred to reached a fever pitch after BlackRock ranked amongst one of the companies with the worst voting records on climate issues. Last month, British hedge fund manager Christopher Hohn said it was appalling that BlackRock did not require companies to disclose sustainability efforts. Activists had staged protests outside BlackRock's office, and members of congress wrote to Fink to urge more climate-related investing, as The New York Times reported. Last month, in an interview with the Financial Times, former Vice President Al Gore asked if passive managers like BlackRock's would like "to continue to finance the destruction of human civilization, or not?"
"BlackRock remains waist-deep in fossil fuel investments and the world's top backer of companies that destroy the Amazon rainforest and ignore the rights of indigenous people," said Extinction Rebellion, as The Guardian reported.
BlackRock's plans to address the climate crisis will start with abandoning investments that "present a high sustainability-related risk," like coal producers. Fink hopes that BlackRock's lead will encourage every company, not just energy companies, to assess their carbon footprint, as The New York Times reported. BlackRock will also ask the companies it invests in to disclose plans for helping the world adhere to the Paris agreement to keep warming below 2 degrees Celsius above pre-industrial times, according to CNN.
The largest impact may be if BlackRock's decision is a watershed moment that triggers a conversation amongst financiers and policymakers about the climate crisis. It will also put pressure on other large financial players to articulate a clear sustainability strategy, as The New York Times reported.
Not only is changing an investment strategy to support sustainability good for combating the climate crisis, but it can also be profitable. As The New York Times pointed out, "Had Mr. Fink moved a decade ago to pull BlackRock's funds out of companies that contribute to climate change, his clients would have been well served. In the past 10 years, through Friday, companies in the S&P 500 energy sector had gained just 2 percent in total. In the same period, the broader S&P 500 nearly tripled."
BlackRock will also join Climate Action 100+, which bills itself as an investor initiative to to ensure the world's largest corporate greenhouse gas emitters take necessary action on climate change.
While BlackRock's intention to join was welcomed by activists, anger and resentment lingers over the firm's past actions.
"Joining Climate Action 100+ is just a first step in the right direction for BlackRock; it must also respond to the fact that it is the world's biggest investor in deforestation," said Moira Birss, finance campaign director for Amazon Watch, in a press release. "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. BlackRock must make its engagement with companies public and transparent with clear policies, deadlines, and ambitious timelines for shifting capital out of the worst offenders if they won't change."
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By D. André Green II
One of nature's epic events is underway: Monarch butterflies' fall migration. Departing from all across the United States and Canada, the butterflies travel up to 2,500 miles to cluster at the same locations in Mexico or along the Pacific Coast where their great-grandparents spent the previous winter.
Millions of People Care About Monarchs<p>I will never forget the sights and sounds the first time I visited monarchs' overwintering sites in Mexico. Our guide pointed in the distance to what looked like hanging branches covered with dead leaves. But then I saw the leaves flash orange every so often, revealing what were actually thousands of tightly packed butterflies. The monarchs made their most striking sounds in the Sun, when they burst from the trees in massive fluttering plumes or landed on the ground in the tussle of mating.</p><p>Decades of educational outreach by teachers, researchers and hobbyists has cultivated a generation of monarch admirers who want to help preserve this phenomenon. This global network has helped restore not only monarchs' summer breeding habitat by planting milkweed, but also general pollinator habitat by planting nectaring flowers across North America.</p><p>Scientists have calculated that restoring the monarch population to a stable level of about 120 million butterflies will require <a href="https://doi.org/10.1111/icad.12198" target="_blank">planting 1.6 billion new milkweed stems</a>. And they need them fast. This is too large a target to achieve through grassroots efforts alone. A <a href="https://www.fws.gov/savethemonarch/CCAA.html" target="_blank" rel="noopener noreferrer">new plan</a>, announced in the spring of 2020, is designed to help fill the gap.</p>
Pros and Cons of Regulation<p>The top-down strategy for saving monarchs gained energy in 2014, when the U.S. Fish and Wildlife Service <a href="https://www.fws.gov/southeast/pdf/petition/monarch.pdf" target="_blank">proposed</a> listing them as threatened under the Endangered Species Act. A decision is expected in December 2020.</p><p>Listing a species as endangered or threatened <a href="https://www.fws.gov/endangered/esa-library/pdf/listing.pdf" target="_blank">triggers restrictions</a> on "taking" (hunting, collecting or killing), transporting or selling it, and on activities that negatively affect its habitat. Listing monarchs would impose restrictions on landowners in areas where monarchs are found, over vast swaths of land in the U.S.</p><p>In my opinion, this is not a reason to avoid a listing. However, a "threatened" listing might inadvertently threaten one of the best conservation tools that we have: public education.</p><p>It would severely restrict common practices, such as rearing monarchs in classrooms and back yards, as well as scientific research. Anyone who wants to take monarchs and milkweed for these purposes would have to apply for special permits. But these efforts have had a multigenerational educational impact, and they should be protected. Few public campaigns have been more successful at raising awareness of conservation issues.</p>
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="91165203d4ec0efc30e4632a00fdf57d"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/KilPRvjbMrA?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
The Rescue Attempt<p>To preempt the need for this kind of regulation, the U.S. Fish and Wildlife Service approved a <a href="https://www.fws.gov/savethemonarch/pdfs/Monarch%20CCAA-CCA%20Public%20Comment%20Documents/Monarch-Nationwide_CCAA-CCA_Draft.pdf" target="_blank">Nationwide Candidate Conservation Agreement for Monarch Butterflies</a>. Under this plan, "rights-of-way" landowners – energy and transportation companies and private owners – commit to restoring and creating millions of acres of pollinator habitat that have been decimated by land development and herbicide use in the past half-century.</p><p>The agreement was spearheaded by the <a href="http://rightofway.erc.uic.edu/" target="_blank">Rights-of-Way Habitat Working Group</a>, a collaboration between the University of Illinois Chicago's <a href="https://erc.uic.edu/" target="_blank" rel="noopener noreferrer">Energy Resources Center</a>, the Fish and Wildlife Service and over 40 organizations from the energy and transportation sectors. These sectors control "rights-of-way" corridors such as lands near power lines, oil pipelines, railroad tracks and interstates, all valuable to monarch habitat restoration.</p><p>Under the plan, partners voluntarily agree to commit a percentage of their land to host protected monarch habitat. In exchange, general operations on their land that might directly harm monarchs or destroy milkweed will not be subject to the enhanced regulation of the Endangered Species Act – protection that would last for 25 years if monarchs are listed as threatened. The agreement is expected to create up to 2.3 million acres of new protected habitat, which ideally would avoid the need for a "threatened" listing.</p>
A Model for Collaboration<p>This agreement could be one of the few specific interventions that is big enough to allow researchers to quantify its impact on the size of the monarch population. Even if the agreement produces only 20% of its 2.3 million acre goal, this would still yield nearly half a million acres of new protected habitat. This would provide a powerful test of the role of declining breeding and nectaring habitat compared to other challenges to monarchs, such as climate change or pollution.</p><p>Scientists hope that data from this agreement will be made publicly available, like projects in the <a href="https://www.fws.gov/savethemonarch/MCD.html" target="_blank">Monarch Conservation Database</a>, which has tracked smaller on-the-ground conservation efforts since 2014. With this information we can continue to develop powerful new models with better accuracy for determining how different habitat factors, such as the number of milkweed stems or nectaring flowers on a landscape scale, affect the monarch population.</p><p>North America's monarch butterfly migration is one of the most awe-inspiring feats in the natural world. If this rescue plan succeeds, it could become a model for bridging different interests to achieve a common conservation goal.</p>
The annual Ig Nobel prizes were awarded Thursday by the science humor magazine Annals of Improbable Research for scientific experiments that seem somewhat absurd, but are also thought-provoking. This was the 30th year the awards have been presented, but the first time they were not presented at Harvard University. Instead, they were delivered in a 75-minute pre-recorded ceremony.