World’s Largest Investment Company Changes to Sustainable Policies.
BlackRock is an American global investment management company based in New York City. It was founded in 1988 by Larry Fink, current president and CEO and Robert Kapito, also president of the company. BlackRock is considered to be the largest asset management company in the world, and it is one of the most influential financial groups on Wall Street and Washington.
The company functions by investing its assets in equity strategies, cash management, alternative investments and real estate strategies and through BlackRock SolutionsÆ they offer risk management services, strategic advice and their own investment systems to a wide client base whose portfolios total around eight billion dollars.
BlackRock has presented itself as a sustainable investor, however, reports have shown that the company is in fact, the world’s largest investor in coal plant developers with shares worth around $11 billion among 56 coal plant developers. With global warming increasing at dangerous rates these last few years, environmental groups such as the Sierra Club and Amazon Watch called out BlackRock by launching a campaign called “BlackRock’s Big Problem” in September 2018. This campaign stated that Blackrock “is the biggest driver of climate destruction on the planet”.
Another report showed that BlackRock owns more oil, gas, and thermal coal reserves than any other investor with 30 percent of total energy-related emissions from 2017, due in part to the company’s refusal to divest from fossil fuel companies.
Last year, the Institute for Energy Economics and Financial Analysis released a report that estimated that BlackRock had lost investors worth $90 billion over the past decade due to poor performing investments in fossil fuel companies.
Recently, BlackRock announced that sustainability will be their new investment standard through a letter on the official website. “In recent years, an increasing number of our clients have focused on the impact of sustainability in their investment portfolios. […] The most significant of these factors relate to climate change, not only in terms of the physical risk associated with rising global temperatures but also in the risk of transition – mainly in how the global transition to a low-carbon economy could affect the long-term profitability of a company.”
Moreover, an open letter to BlackRock’s clients was released alongside with a series of changes the company will make to put sustainability at the center of its investment approach. These changes include increasing the number of sustainable funds it offers, removing some coal companies from its active funds and being more transparent over its engagement and voting at investee companies.
“As your fiduciary, BlackRock is committed to helping you navigate this transition and build more resilient portfolios, and this includes seeking higher and more stable long-term returns. Because sustainable investment options have the potential to offer better results to costumers, we are making sustainability an integral element in how BlackRock manages risk, build portfolios, design products and interact with companies. We believe that sustainability should be the new investment standard.”
Earlier in January, after the increasing pressure from activists, the US investment firm joined Climate Action 100+, a group of more than 370 investment managers with a total of $41 trillion in assets and who seeks for companies whose businesses exacerbate climate change to reduce their greenhouse gas emissions.
There has been some controversy since BlackRock, who manages assets from BP, Shell and Exxon Mobile, has voted against various resolutions brought by Climate Action 100+ and this has increased the backlash and accusations against the company. Regardless, the fact that they are now signed onto Climate Action 100+ could mean a change in the company to finally stop being behind holding the world’s biggest emitters of greenhouse gases accountable.
“In joining CA100+, BlackRock is responding to the demands of its asset-owner clients and other groups globally that they take meaningful action to address climate change,” Fiona Reynolds, chief executive of UN-backed investment group Principles for Responsible Investment said in a statement.
The fact that the world’s biggest investment corporation is joining forces with a company whose mission is to get other powerful companies to reduce their greenhouse gases emissions could be an important step towards persuading other companies to join as well and together help decrease the acceleration of global warming and climate change.
“BlackRock’s initiatives match the size of the crisis we are currently seeing. Making climate change the number one priority in their business is the way every company must respond to this planetary emergency” expressed Diana Best, senior strategist of Sunrise Project, a non-profit organization that seeks to gather other companies to fight for climate change.