Black­rock sig­nals a change in in­vest­ing

Antelope Valley Press - - FRONT PAGE - By STAN CHOE AP Busi­ness Writer

NEW YORK — A chang­ing cli­mate means dramatic risks for the world — and for in­vest­ments too, the chief of the world’s largest in­vest­ment man­ager said Tues­day.

To pre­pare for and pro­tect against those risks, Black­Rock CEO Lau­rence Fink said in his in­flu­en­tial an­nual let­ter to CEOs that his firm, which man­ages roughly $7 tril­lion for in­vestors, will make a se­ries of moves putting cli­mate change and sus­tain­abil­ity at the cen­ter of its in­vest­ing ap­proach.

Among them, Black­Rock will cut out in­vest­ments in some coal pro­duc­ers from some of its port­fo­lios, sharply in­crease the num­ber of sus­tain­abil­ity-fo­cused funds that it of­fers, and vote against com­pa­nies at share­holder meet­ings when they’re too slow in dis­clos­ing and mit­i­gat­ing their im­pact on the en­vi­ron­ment.

“Cli­mate change has be­come a defin­ing fac­tor in com­pa­nies’ long-term prospects,” Fink wrote in his let­ter, adding that he be­lieves “we are on the edge of a fun­da­men­tal re­shap­ing of fi­nance” be­cause of it.

Fink pre­dicted that the changes in how cap­i­tal is de­ployed will come “more quickly than we see changes to the cli­mate it­self,” and “sooner than most an­tic­i­pate.”

In fact, the shift is al­ready un­der­way.

In­vestors poured a net $20.6 bil­lion into sus­tain­able funds across the in­dus­try last year, nearly quadru­ple the record set a year ear­lier, ac­cord­ing to Morn­ingstar. In­vestors, par­tic­u­larly younger ones, in­creas­ingly say they want their money in­vested with an eye to­ward sus­tain­abil­ity. The to­tal dol­lars are still small rel­a­tive to the en­tire in­dus­try — in­vestors plugged a to­tal of $413.9 bil­lion into all tax­able bond funds last year, while yank­ing $41.3 bil­lion out of all U.S. stock funds — but the trend is clear and ac­cel­er­at­ing.

Fear­ful of los­ing out on those dol­lars — and the fees that they pro­duce — in­vest­ment com­pa­nies are rush­ing to meet the surg­ing de­mand.

Black­Rock and other huge as­set man­agers are gen­er­ally be­hind smaller com­peti­tors when it comes to sus­tain­abil­ity, said Danielle Fugere, pres­i­dent of share­holder-ad­vo­cacy group As You Sow. Black­Rock, State Street, Van­guard and oth­ers have been crit­i­cized for not do­ing more about the en­vi­ron­ment. Be­sides protests out­side its Man­hat­tan head­quar­ters, Black­Rock has also heard crit­i­cism from mem­bers of Congress who be­lieve it could bet­ter ad­dress cli­mate change.

Be­cause of its size and reach, any shift in fo­cus by Black­Rock could al­ter the in­dus­try. It is a ma­jor share­holder in thou­sands of com­pa­nies through its pop­u­lar ex­change-traded funds that track var­i­ous in­dexes, as well as its funds run by stock-pick­ing man­agers. But Fugere said Tues­day’s an­nounce­ment is only a first step.

“The words are sig­nif­i­cant, and the words show lead­er­ship,” Fugere said. “But that’s not enough. We have to see on the ground ac­tion, and we need to see it quickly. There is no time. Aus­tralia is burn­ing up. Cal­i­for­nia is burn­ing up.”

The wild­fires in parts of Aus­tralia and Cal­i­for­nia and other re­cent dis­as­ters have shown big in­sti­tu­tional in­vestors that cli­mate change is just as much a threat to their re­turns in the near term as over the com­ing decades.

“The phys­i­cal risks have be­come so im­me­di­ately clear and stark,” said Amy Bor­rus, deputy di­rec­tor of the Coun­cil for In­sti­tu­tional In­vestors, whose mem­bers in­clude pen­sion funds, en­dow­ments and other U.S.-based as­set own­ers in­vest­ing more than $4 tril­lion.

“Many in­sti­tu­tional in­vestors will wel­come th­ese steps by Black­Rock,” she said.


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