BlackRock has established itself as an asset management firm that understands the inextricable links between climate change and fiduciary responsibility. Larry Fink famously said in his 2020 letter to CEOs: “We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients.”
Two years on, BlackRock is backsliding from its leadership position as a far-sighted investor with its feet firmly planted in the reality that climate risk is economic risk by failing to meet the urgency of the moment.
Last year, BlackRock became a signatory to the Net Zero Asset Managers’ Initiative, the stated goal of which is to achieve “net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius.” The latest IPCC report makes it crystal clear that any kind of fossil fuel expansion is absolutely incompatible with a 1.5°C pathway. BlackRock itself in its 2020 letter to clients said of thermal coal: “we do not believe that the long-term economic or investment rationale justifies continued investment in this sector.”
Well, BlackRock currently holds a whopping $109 billion in overall coal investments — with 31% of that total in new coal development projects. Just last December, the firm also led a $15.5 billion investment in a new Saudi Aramco gas pipeline. Hydrocarbons are a long-established “bridge [fuel] to nowhere” that also have no place in a 1.5°C scenario. Despite this, Fink dubbed the deal a climate win to BlackRock shareholders.
In his 2022 letter to CEOs, Fink asked a crucial question: “Every company and every industry will be transformed by the transition to a net zero world. The question is, will you lead, or will you be led?” BlackRock, however, just deferred its leadership potential for the 2022 annual general meeting season. While “no fossil fuel expansion” resolutions have received support from significant institutional investors, such as the New York State and Texas State Pension Funds, BlackRock called such resolutions “too prescriptive” and said its votes for climate resolutions will decrease this year. It seems despite its previously bold words, BlackRock is choosing … not to lead.
With scientists explicitly telling the world that the narrow window of opportunity to limit global warming to 1.5°C is closing, now is the time BlackRock needs to be stepping up its leadership on climate, not backing off.