Quantcast
Environmental News for a Healthier Planet and Life

World’s Largest Fund Manager to 'Reshape' Investment Portfolio to Consider Climate Crisis, Sustainability

Business
In response a report by Majority Action, members of New York Communities for Change (NYCC), Mothers Out Front (MOF), Sunrise Movement NYC, Sierra Club and 350Brooklyn gathered for a press conference on Sept. 17, 2019 outside BlackRock offices in New York City. Erik McGregor / LightRocket via Getty Images

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."

EcoWatch Daily Newsletter

Penguins are seen near the Great Wall station in Antarctica, Feb. 9, days after the continent measured its hottest temperature on record at nearly 65 degrees Fahrenheit. Xinhua / Liu Shiping / Getty Images

By Richard Connor

Scientists have recorded Antarctica's first documented heat wave, warning that animal and plant life on the isolated continent could be drastically affected by climate change.

Read More Show Less
The Athos I tanker was carrying crude oil from Venezuela when a collision caused oil to begin gushing into the Delaware River. U.S. Department of the Interior

A case that has bounced around the lower courts for 13 years was finally settled yesterday when the U.S. Supreme Court upheld a lower court decision, finding oil giant Citgo liable for a clean up of a 2004 oil spill in the Delaware River, according to Reuters.

Read More Show Less
Sponsored
The buildings of downtown Los Angeles are partially obscured in the late afternoon on Nov. 5, 2019, as seen from Pasadena, California, a day when air quality for Los Angeles was predicted to be "unhealthy for sensitive groups." Mario Tama / Getty Images

The evidence continues to build that breathing dirty air is bad for your brain.

Read More Show Less
Wave power in Portugal. The oceans' energy potential is immense. Luis Ascenso, via Wikimedia Commons

By Paul Brown

The amount of energy generated by tides and waves in the last decade has increased tenfold. Now governments around the world are planning to scale up these ventures to tap into the oceans' vast store of blue energy.

Read More Show Less
Yellowstone National Park closed to visitors on March 24, 2020 because of the Covid-19 virus threat. William Campbell-Corbis via Getty Images

When the novel coronavirus started to sweep across the country, the National Park Service started to waive entrance fees. The idea was that as we started to practice social distancing, Americans should have unfettered access to the outdoors. Then the parking lots and the visitor centers started to fill up, worrying park employees.

Read More Show Less