Climate emergency is altering how investors view the long-term

Joanna Partridge of The Guardian reports that the world's largest fund manager, BlackRock, CEO Larry Fink says climate crisis will now guide its investments.

Changing investment emphasis

He predicts fast reshaping of global finance. In his annual letter to chief executives, the BlackRock boss, Larry Fink, writes that the climate emergency is altering how investors view the long-term prospects of companies. “Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.” Fink’s statement marks a step change at the US investment firm. In his 2019 annual letter, Fink said his overriding duty was to make customers money.

BlackRock identifies several new measures in its investment approach, such as lowering its exposure to fossil fuel companies, which has been a major demand by environmental protesters. These include: “Making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.”
The company said it intended to play an active role in solving the climate crisis: “BlackRock does not see itself as a passive observer in the low-carbon transition. We believe we have a significant responsibility – as a provider of index funds, as a fiduciary, and as a member of society – to play a constructive role in the transition.”1

A fundamental reshaping of finance may make continuing investment in fossil fuels less secure and may strand assets of the fossil fuel companies.

References

1(2020, January 14). BlackRock says climate crisis will now guide its investments .... Retrieved January 14, 2020, from https://www.theguardian.com/business/2020/jan/14/blackrock-says-climate-crisis-will-now-guide-its-investments