BlackRock CEO calls for stronger climate finance plan at G-20 meeting
VENICE1 (Reuters) – BlackRock CEO Larry Fink on Sunday called for governments to develop a stronger longterm climate finance plan to unlock the private capital needed to fund the transition to a low-carbon economy.
Without such a plan, current efforts, including on corporate-sustainability disclosures, risked being “nothing more than window dressing,” he said at the Venice International Conference on Climate during a meeting of G-20 finance ministers.
Fink, who heads the world’s biggest asset manager, with around $9 trillion in assets, also called for reform of the International Monetary Fund and the World Bank to make them more suited to tackle the challenge of climate change.
He highlighted three “critical” issues that were needed to power the ecological transition, which he said represented a $50t. opportunity for investors. BlackRock is a major investor in fossil fuels.
Firstly, private companies needed to be under the same pressure to share information on their sustainability efforts as public companies, Fink said.
Currently, listed oil and gas companies had a “massive incentive” to sell out of more polluting assets, often to private and state-owned companies on which there is less scrutiny and which disclose far less about their operations, he said.
Secondly, governments risked fueling inequality unless they created more demand for greener products and services, lowering the cost, or “green premium,” which penalizes the worse off and could fuel social instability, Fink said.
Lastly, global institutions such as the World Bank and the IMF needed to be changed so they could do more to encourage private-sector capital to help fund the transition in emerging markets, he said.
The two bodies were created nearly 80 years ago based on a bank balance-sheet model, Fink said, adding that it was now necessary to “rethink their roles.”
Citing BlackRock’s role in the creation of a $250 million public-private climate finance strategy to help fund sustainable infrastructure, in which government and philanthropic investors provide subordinated capital to protect the returns of private investors, more of the same was needed, he said.
“If we don’t have international institutions providing that kind of first-loss position at a greater scale than they do today, properly overseeing
these investments and bringing down the cost of financing and the cost of equity, we’re just not going to be able to attract the private capital necessary for the energy transition in the emerging markets,” Fink said.