BlackRock issues climate change warning to investors

Marco Green
January 15, 2020

Fink said that the decision was partly made after the climate crisis became the issue most often raised by clients.

These include exiting certain investments such as thermal coal producers, developing investment products to screen fossil fuels, and enhancing the transparency of its investment stewardship activities.

"I believe we are on the edge of a fundamental reshaping of finance". "In the near future - and sooner than most anticipate - there will be a significant reallocation of capital".

Investors, particularly younger ones, increasingly say they want their money invested with an eye toward sustainability. Afraid to lose those dollars - and the costs they produce - investment companies are rushing to meet rising demand.

Going forward BlackRock will put in place measures to ensure that environmental, social and governmental (ESG) risk is considered by its portfolio managers with the "same rigour" against which traditional risk measures, such as credit and liquidity, are measured.

In addition, BlackRock's alternatives business will make no future direct investments in companies that generate more than 25% of their revenues from thermal coal production.

BlackRock now manages $50bn in funds and other products that support the transition to a low-carbon economy, including a renewable power infrastructure business, which invests in the private markets in wind and solar power, green bond funds as well as other areas.

ESG funds say that such an approach can help investors' returns, rather than just their conscience, because it can help prevent risky companies and the large losses they may have in the future. Companies with poor records on the environment are more likely to face big fines, for example.

Europe's investment plan, to be unveiled on Tuesday, is funded by the European Union budget and the private sector. The firm has always been a target of environmental activists who have staged protests outside of its headquarters in Midtown Manhattan.

BlackRock has been criticised for not using its considerable influence to tackle climate change.

Because of its size and reach, any shift in focus by BlackRock has the potential for much wider ramifications.

Investment giant BlackRock Inc. announced a series of moves Tuesday to address risks related to climate change, following criticism from investors and advocacy groups for investing in fossil fuels and allegedly being slow to act on green issues.

Other reports by Click Lancashire

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