Asset manager BlackRock has announced that it will change its investment strategy and abandon investments that it considers a sustainability risk.
BlackRock, the giant asset manager in charge of $7 trillion, will change its investment strategy to ditch investments it considers a sustainability risk, including thermal coal producers. The change in strategy is part of the company’s initiative to place sustainability at the center of its approach to investing.
BlackRock chief executive officer (CEO) Larry Fink wrote in a widely read letter to other chief executives: “Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.” Fink predicts that crucial changes to how capital is allocated globally are coming, and that these changes will come “sooner than most anticipate.”
The company has expressed its intention to double its offering of exchange-traded funds that track companies that follow certain environmental metrics. The asset manager is also asking companies it invests in to disclose plans in relation to the Paris Agreement’s goal of limiting global warming to less than 2 degrees Celsius.
Fink said: “We will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.”
The company is facing increased pressure to romp up its promotion of sustainability given its influence. In December, former US Vice President Al Gore told the Financial Times: “I think the large passive managers have a real difficult decision to make.”
Gore added: “Do they want to continue to finance the destruction of human civilization, or not?”
BlackRock earlier this month joined Climate Action 100+, a group of around 370 global investors representing more than $41 trillion in assets. Group members lobby companies to lower their carbon emissions in line with the Paris Agreement.