BlackRock issues climate change warning to investors

BlackRock issues climate change warning to investors

BlackRock issues climate change warning to investors

BlackRock will also "closely scrutinize" other businesses that are heavily reliant on thermal coal as an input, in order to understand whether they are effectively transitioning away from this reliance.

"Climate change is nearly invariably the top issue that clients around the world raise with BlackRock".

"We believe that sustainable investing is the strongest foundation for client portfolios going forward", Fink wrote.

"In the near future - and sooner than most anticipate - there will be a significant reallocation of capital", he added.

This shift is already underway.

Blackrock's approach contrasts with Norway's $1T sovereign wealth fund, which said a year ago it would stop investing in companies that mine more than 20M tons/year of thermal coal; Anglo, BHP and Glencore all exceed that requirement.

Investors deposited $ 20.6 billion in sustainable funds last year, almost quadrupling the record it had reached a year earlier, according to Morningstar. The industry has broadened in recent years, after starting with simple funds that bluntly excluded stocks deemed as harmful, such as gun makers or tobacco stocks.

CEO Larry Fink today released his annual letter where he announced a series of policies aimed at putting climate change and sustainability at the center of the company's business model. Afraid to lose those dollars - and the costs they produce - investment companies are rushing to meet rising demand.

The firm said it would assess environmental, social and governance, or ESG, factors with the same rigor as liquidity and credit risk.

BlackRock now manages $50bn in funds and other products that support the transition to a low-carbon economy, including a renewable power infrastructure business, which invests in the private markets in wind and solar power, green bond funds as well as other areas.

ESG funds say such an approach can help investors' returns, rather than just their consciences, because it can help avoid risky companies, and the big losses they may have ahead of them in the future. For example, companies with a poor environmental record often have to deal with high fines.

Europe's investment plan, to be unveiled on Tuesday, is funded by the European Union budget and the private sector.

The shift by BlackRock is substantial. It has been hounded by some members of Congress who believe BlackRock could better address climate change with its vast economic heft.

Due to the size and range, any shift in focus due to BlackRock can have much wider consequences.

In a separate letter to clients, Fink said: "Resilient and well-constructed portfolios are essential to achieving long-term investment goals".

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