BlackRock chief makes green push
AUCKLAND: BlackRock, the world’s biggest asset manager and a familiar sight on the share registers of many of New Zealand’s top companies, has taken the world’s corporates to task over environmental sustainability.
Larry Fink, BlackRock’s chairman and chief executive, in an open letter to chief executives, said climate change had become a defining factor in companies’ longterm prospects and that the evidence on climate risk was compelling investors to look again at the core assumptions surrounding modern finance.
Mr Fink said there would be a ‘‘profound reassessment of risk and asset values’’ as more investors recognised that climate risk is investment risk.
In addition, he said the world was on the verge of a ‘‘significant reallocation of capital’’.
It’s not the first time Mr Fink has taken the corporate sector to task.
In the past he has hit out at shorttermism and has called for US companies to repatriate overseas cash.
In his letter this week, Mr Fink outlined what BlackRock — which has $US7 trillion ($10.5 trillion) in assets under management — was doing to integrate sustainability more deeply into what it does, particularly in the environmental, social and governance (ESG) area.
That meant deepening the integration of sustainability across its investment and risk management platform.
It also meant reducing ESG risks in its active strategies by exiting certain sectors, such as coal.
‘‘We are continuously evaluating the riskreturn profile posed by specific sectors we invest in as we seek to minimise risk and maximise longterm return for our clients,’’ Mr Fink said.
‘‘Based on our review, we are in the process of removing from our discretionary active investment portfolios the public securities (both debt and equity) of companies that generate more than 25% of their revenues from thermal coal production, which we aim to accomplish by the middle of 2020,’’ Mr Fink said.
BlackRock would expand its sustainable offerings by doubling its ESG exchange traded funds (ETFs) offerings to 150 and would introduce new fossilfuel screened funds, Mr Fink said.
In an interview with CNBC, Mr Fink said the $US3.8 trillion municipalbond market, which finances roads, utility systems and other infrastructure, was vulnerable to the impacts of devastating storms, wildfires or rising seas.
‘‘Areas that are more impacted by climate change [are] going to have harder time to finance their debt if they don’t focus on the impact of climate change.’’
International business news wire Bloomberg said Mr Fink, in the stroke of a pen, had became one of the most powerful champions of green investing in global finance.
‘‘But behind his new sustainableinvesting push at BlackRock lies an uncomfortable truth: going green won’t be easy or quick. Today BlackRock funds hold a 6.7% stake in Exxon Mobil Corp, for instance, as well as 6.9% in Chevron Corp and 6% in coal giant Glencore Plc.
‘‘And, in all likelihood, they’ll keep holding them, for the same reason that BlackRock is so big and successful: two thirds of its roughly $US7 trillion in assets are squirrelled away in funds that passively track market indexes, rather than actually pick stocks or bonds,’’ Bloomberg said. — The New Zealand Herald