![]() But there are tradeoffs between divestment and engagement. Photo by Michael Buholzer/World Economic Forum 2) Use its Influence to Push Other Companies to Change.įink writes that “divesting from entire sectors - or simply passing carbon-intensive assets from public markets to private markets - will not get the world to net zero.” This indicates that BlackRock prefers to remain invested in some problematic companies and change them from within with incentives and pressure, a strategy known broadly as engagement or investment stewardship.Įngagement can reshape finance. In his annual letter, Fink explains how world's largest asset manager will deal with the mounting risks posed by climate change. Since it is asking companies for shorter-term targets, it should lead by example.Īs part of the Net Zero Asset Managers initiative, Blackrock should “set interim targets for 2030, consistent with a fair share of the 50% global reduction in carbon dioxide identified as a requirement in the IPCC special report on global warming of 1.5 degrees C (2.7 degrees F).” BlackRock should set a robust short-term target as soon as possible, given that it presents itself as a climate action leader of the financial industry.īlackRock CEO Larry Fink. However, BlackRock itself has only committed to being net-zero by 2050, outlined in Fink’s 2021 letter. ![]() ![]() It encourages early action that climate scientists say is necessary, and mirrors the best practices seen in the Science-Based Targets initiative’s Net-Zero Standard. This is a positive step for BlackRock, which only asked for a 2050 target last year. And this is what BlackRock seeks in this year’s letter from the companies it invests in: “As part of focus, we are asking companies to set short-, medium- and long-term targets for greenhouse gas reductions.” Short- and medium-term targets that begin for 2025 and progress in five-year increments can help assuage such doubts. However, critics question whether a deadline three decades away will motivate corporations that are more focused on quarterly earnings - particularly because emissions reductions need to start now to have a chance of stemming the most severe climate change impacts. Here are three key areas where BlackRock can do better to raise the standard for sustainable finance: 1) Improve its Own Climate Targets.įor the last several years, businesses have increasingly framed their climate efforts in terms of reaching net-zero emissions by 2050. As the dust settles from Fink’s 2022 letter and other recent developments, we went past the headlines to analyze where BlackRock stands and what it can do in the coming year. But climate change will bear on just about every kind of business imaginable over the coming decades, and BlackRock invests in just about the entire market.įink’s letters detail his firm’s plans for dealing with these risks and capitalizing on affiliated opportunities. Different firms, sectors and geographies have different climate risk profiles. Indeed, a key theme of Fink’s over the last few years is a growing class of risks that touch every corner of the economy - those related to climate change, its impacts and the transition away from fossil fuels. Titled " The Power of Capitalism," Fink's missive offered insights into where he sees opportunity and risk, and what weight this super-giant firm places on sustainable business. The letter builds on other signs of Fink’s growing concern about climate change, as expressed in past letters, appearances at COP26, op-eds and more. Parsing the details of his annual letter to companies has become something of a ritual among finance-watchers, and this year's letter, released January 17, 2022, was no exception. BlackRock is, after all, the world’s biggest asset manager, with a record $10 trillion in assets under management. ![]() When BlackRock Chairman Larry Fink speaks, the investment world tends to listen.
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