After years of dismay at climate activists for continuing to provide fossil fuels to customers,
CEO Larry Fink stated that the company's actively managed funds would no longer hold shares in companies that generate more than 25% of thermal coal revenue.
Fink's January letters to CEOs of portfolio companies and clients have received widespread attention, for example in 2018, when the world's largest money manager said that companies could not make long-term profits without considering the purpose and needs of a wide range of stakeholders to consider. The Business Roundtable followed last year, redefining the purpose of a company as one that "promotes an economy that serves all Americans."
In his letter, Fink said that climate risk is the main issue that customers are addressing with BlackRock (ticker: BLK), "and I believe we are facing a fundamental reorganization of finance."
BlackRock intends to be part of this transition with assets of $ 1.8 trillion. By mid-2020, the company will release the approximately $ 500 million in debt and shares of companies that generate more than a quarter of the income from thermal coal mining. BlackRock is reportedly the asset manager with the largest stake in thermal coal worldwide.
The major coal producers include
Alliance Resource Partners LP,
Arch and Peabody did not immediately respond to a request for comment.
BlackRock will double its range of ESG funds to 150 over the next few years. It will simplify and expand ESG iShares so customers can significantly improve their ESG results, said Fink. In addition, BlackRock will begin to turn sustainable funds into “standard building blocks” when offering clients investment solutions, including sustainable versions of their target funds and iShares for asset allocation.
Every active management team at BlackRock already takes ESG factors into account. By the end of 2020, all active portfolios will “be fully integrated into the ESG,” writes Fink. BlackRock's risk and quantitative analysis group assesses ESG risk in regular monthly meetings with the portfolio managers.
Finally, BlackRock will also vote against companies that do not provide sustainability information. The company has already asked companies to provide information in accordance with the guidelines of the Sustainability Accounting Standards Board (SASB) and the task force for climate-related financial information. "Given the fundamentals we have already laid out and the growing investment risk related to sustainability, we will be increasingly willing to vote against management if companies have not made sufficient progress," wrote Fink.
In a statement, Diana Best, senior strategist for the Sunrise Project, a BlackRock critic, said: “BlackRock has started relocating its fossil fuel capital, including today's sale of coal to its actively managed funds, to raise the bar for competitors like Vanguard and State Street Global Advisors. With today's announcements, BlackRock's size will continue to make it one, if not the largest, of fossil fuel investors. Therefore, we will look for an additional leadership role for the company, as Larry Fink said, to fundamentally change funding to address climate change, including additional shifts in fossil fuel capital.
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