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Larry Fink, the CEO of $7 trillion BlackRock, announced on Tuesday that the firm would shift its investment strategy to focus on climate change.
BlackRock will exit investments with a “high sustainability-related risk” and make sustainability “integral” to its investment portfolios, Fink said.
The announcement received mixed reactions from climate activists. Some said the move is a “major first step on climate action” but others said that “the world’s biggest miners and polluters will not be losing any sleep over this.”
Amazon Watch, an organization that advocates for the Amazon rainforest and the indigenous people who live there, called on BlackRock to do more with its influence — including lobbying for action on climate change directly.
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The $7 trillion investment firm BlackRock announced on Tuesday that it would make climate change the focus of how it does business — and it warned governments and other companies that they should as well.
But the announcement received mixed reactions from climate activists, who said the move was a promising first step that leaves more to be done.
BlackRock CEO Larry Fink said in his annual letter — an influential message closely watched by CEOs and finance executives — that his firm would be changing its investment strategy to focus on climate change. BlackRock will exit investments with a “high sustainability-related risk” like thermal coal producers, and make sustainability “integral” to the way it builds investment portfolios, Fink said.
Advocates for climate change action like Moira Birss, finance campaign director at Amazon Watch, were “pleasantly surprised about the scale of BlackRock’s announcement.” She told Business Insider that BlackRock’s move is a “very important and significant step in the right direction.”
But, Birss said, “we don’t think it’s all that needs to be done by any means.” Amazon Watch is a part of the “BlackRock’s Big Problem” campaign, along with organizations like the Sierra Club, the Sunrise Project and ShareAction.
Birss said BlackRock has not explicitly pledged to stop investing in fossil fuel companies, which she said contribute directly to climate change. She also called on the investment firm to push the agricultural companies it invests in, such as beef producers in Brazil, to operate more sustainably.
Birss also said BlackRock should use its resources to lobby directly for climate change and encourage institutions like the Federal Reserve to join organizations such as the Network for Greening the Financial System, whose members include the federal banks of Canada, Mexico, Spain and the United Kingdom, among others.
While BlackRock’s move shows progress, it’s a “pretty minor shift” compared to the scale of climate change, Birss said, adding that it “remains to be seen how much action will actually be taken.”
BlackRock did not immediately respond to a request for comment.
A mixed reaction from activists
Climate-activism organization Extinction Rebellion, which has protested outside BlackRock’s offices in London, went further, saying that Fink’s announcement is being “used to distract from the truth.”
“The world’s biggest miners and polluters will not be losing any sleep over this,” Extinction Rebellion said in a statement on Tuesday. “BlackRock remains waist-deep in fossil fuel investments and the world’s top backer of companies that destroy the Amazon rainforest and ignore the rights of indigenous people.”
Diana Best, senior strategist at the Sunrise Project, said the announcement on Tuesday “instantly raises the bar” for BlackRock’s competitors and is the result of an “outpouring of pressure from the global climate movement.”
Sierra Club campaign representative Ben Cushing said the move was a step in the right direction, “but BlackRock will continue to be the world’s largest investor in coal, oil, and gas. It is time to turn off the money pipeline to dirty fossil fuels for good.”
While activists said Fink’s announcement leaves a lot to be desired, Axel Pierron, cofounder and managing director at consulting firm Opimas, said the change in strategy is likely to have a large impact on the industry.
“The decision by BlackRock to integrate climate change risk into its investment strategy will have a profound impact [on] the evolution of capital markets activities,” Pierron said.
He added that BlackRock is not the first to make such a shift, as European asset manager Amundi made similar commitments previously, but that BlackRock’s announcement is likely to trigger a shift in the industry “along the entire investment management value chain.”
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