Daily Management Review

BlackRock C.E.O Push Companies Towards Net Zero Transition


Last month, BlackRock had urged companies to “lay out their plans” of reaching “net-zero emissions by 2050”.

BlackRock is the “biggest” asset management company in the world led by C.E.O Larry Fink. While Fink gave out a warning to the companies that the asset manager “invests in”, saying the former needed to come up with a “game plan” to move towards the target of “net-zero carbon emissions by mid-century”.
Fink’s annual letter addressing “management of companies across the world” talked about the need to present clear plan “integrated into the company’s long-term strategy and reviewed by the board”. Fink’s advice to investors preparing to turn their portfolio towards “a net-zero economy” included “where possible, publishing scores for how its equity and bond funds are positioned to adapt to global temperature changes”.
Campaigners as well as policy-makers are pushing asset management sector to “do more” so as to make companies responsible towards their “climate plans” before the “next round of global climate talks” scheduled to be held later in the year in Scotland.
BlackRock has “$8.7 trillion” worth of asset management which marks “significant stake in most large U.S. corporations and in many in other countries” as a result it has a large scope to influence them “over their decisions”. In Fink’s words:
“The world is moving to net zero, and BlackRock believes that our clients are best served by being at the forefront of that transition”.
“We are carbon neutral today in our own operations and are committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner. No company can easily plan over 30 years, but we believe all companies – including BlackRock – must begin to address the transition to net zero today.”
In fact, last month, BlackRock had urged companies to “lay out their plans” of reaching “net-zero emissions by 2050”. However, the same mentioned in Fink’s letter will capture far “more investor attention”. While, Fink also mentions that methods of “measuring temperature alignment” are always developing depending on “new research and data specific to particular sectors and regions”.
BlackRock will also take into consideration climate risks while making its “capital markets assumptions” as well as in implementation of a “heightened-scrutiny model” while taking decision on “assets to include in its actively managed portfolios”.
Furthermore, Reuters added:
“Going forward, BlackRock would also publish details of the proportion of its assets under management that are aligned with net zero and plans to announce interim targets for the proportion it aimed to be net-zero aligned by 2030”.
Last year, BlackRock informed its clients that it was choosing sustainability as its “new standard for investing”. Following the same, it announced a policy under which it sold out of “some coal companies” while many campaigners had complained then saying the “bar set by BlackRock” was quite high. However, there was pressure on the company to “take a more aggressive stance”, yet Fink’s letter did not talk about coming out with higher bars, whereby “drawing criticism from some”.
In the words of Reclaim Finance’s Lara Cuvelier, a “sustainable investment campaigner”:
“Larry Fink’s new net-zero commitment could be a positive step if it were paired with concrete and immediate action to stop investing in new fossil fuels. But a year after its first, extremely weak coal commitment, BlackRock has yet to announce a more ambitious policy”.