BlackRock Wields Its $6 Trillion Club To Combat Climate Risks
Above Photo: Joe Brusky/ Flickr
Note: Activists have been putting pressure on banks and investors to stop investing in climate polluting industries. Now, a leading investment corporation is urging the same thing – not because of the issue, but because of the risk to profits. The reality of climate change may lead to a significant shift in financing from polluting industries to clean, sustainable energy sources.
BlackRock Inc., the world’s biggest asset manager, is telling companies that now is the time to start reporting clear information on climate risk to their businesses.
The firm, which oversees almost $6 trillion in assets, sent letters from its corporate-governance team to about 120 companies this week, urging them to report climate dangers in line with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, set up by Bank of England Governor Mark Carney.
The letters were sent globally to BlackRock holdings with “material climate risk inherent in their business operations,” such as those in the energy, transportation and industrial sectors, according to a copy seen by Bloomberg. They were signed by Michelle Edkins, the firm’s global head of investment stewardship.
BlackRock, along with investors such as UBS Asset Management and JPMorgan Chase & Co., is a participant in the task force led by Bloomberg LP founder Michael Bloomberg. The group concluded in June that companies affected by climate change should conduct scenario analyses and include those results in their financial reports. BlackRock sees this framework as “a means to achieve the comparability and consistency of reporting that is important to us as investors,” it said in the letter.
The move is the latest by BlackRock on climate change after casting its first votes this year in favor of shareholder proposals asking companies such as Occidental Petroleum Corp. and Exxon Mobil Corp. to provide more detail on the topic. Chief Executive Officer Larry Fink said in his annual letter to CEOs earlier this year that the New York-based firm would not be “infinitely patient” with companies on environmental and social issues that carry long-term risks.
A broader group of investors, including the United Nations-supported Principles for Responsible Investment, are also set to expand efforts to push large corporate greenhouse-gas emitters to improve climate disclosure at French President Emmanuel Macron’s climate summit in Paris next week, timed for the two-year anniversary of the landmark Paris Agreement.