Investors Need Disclosure On New Energy Efforts
BlackRock Chief Pushes a Big New Climate Goal for the Corporate World Larry Fink is using his firm’s huge influence to pressure companies to eliminate greenhouse gas emissions by 2050.
Andrew Ross Sorkin, January 26, 2021 (NY Times)
“…[The annual letter from the head of the $9 trillion BlackRock fund, arguably the world’s most powerful investor, asks CEOs] “to disclose a plan for how their business model will be compatible with a net-zero economy,” which he defines as limiting global warming to no more than 2 degrees Celsius above preindustrial averages and eliminating net greenhouse gas emissions by 2050. “We expect you to disclose how this plan is incorporated into your long-term strategy and reviewed by your board of directors,” he wrote…When Mr. Fink makes what sounds like a request, in truth, it is much more than that. BlackRock’s size gives it enormous influence…[I]ncreasingly, BlackRock is creating sustainability-oriented index funds that have discretion in selecting which companies to include or exclude…
Mr. Fink said in his letter that his firm planned to adjust its investment process for its actively managed funds, adopting what he is calling a “heightened-scrutiny model” for climate risk that included “flagging holdings for potential exit.”…He also said that the firm planned to publish “a temperature alignment metric for our public equity and bond funds…with explicit temperature alignment goals, including products aligned to a net-zero pathway.”… In the future, big public pension funds and other investors could have firms like BlackRock create custom indexes for them based on such data…These sorts of actions won’t sacrifice investment performance, Mr. Fink said. Sustainable funds outperformed the market last year, he noted, especially during the worst moments of the pandemic downturn…” click here for more