The facts about Big Finance and climate chaos

Larry Fink has said that climate change is a major threat to clients’ investments, so continuing to support the companies driving climate change makes BlackRock part of that threat. There is an inherent conflict between the long-term survival of companies whose core business model is based on fossil fuels or deforestation and the long-term existence of life as we know it. Continuing to hold fossil fuel companies in a portfolio is an abdication of long-term fiduciary responsibility. Until it pursues action that aims to materially reduce greenhouse gas emissions, BlackRock is trying to have its cake and eat it, too.

Climate change poses an enormous systemic risk to our economy. So much so that Larry Fink himself said that climate change will reshape finance. Given the systematic threat of climate change, the only way a financial firm can fulfill its long-term fiduciary duty to its clients is by proactively acting to mitigate the climate crisis. Financial firms that do not take the climate impact of their investments into account are not acting in the best interest of their clients or our economy.

Of course not. Change takes time, but we need bold and visionary leadership right now – while we still have a chance to avoid the worst impacts of the climate crisis. We can’t rely on incrementalism while the world burns. Larry Fink says coal won’t disappear tomorrow, but science says we need to stop burning coal as quickly as possible, so funnelling dollars into the industry just pushes us closer to the brink. This all comes down to one simple truth: humanity must avoid catastrophic climate change. Asset managers who publicly acknowledge this truth while propping up companies that drive us toward catastrophe are not leaders or visionaries, and they are certainly not putting sustainability at the center of their investment decisions.

Fewer institutional investors are buying energy stocks, and, for many companies, institutional investors are reducing the size of their fossil fuel holdings. The energy transition, in which global economic growth is increasingly decoupled from fossil fuel use, is underway. As energy stocks have become less relevant, other sectors are moving forward.

True climate leadership must include taking responsibility for avoiding systemic impacts to the financial system and economy overall. BlackRock’s existing portfolio, unchecked, is driving runaway climate change. The notion that passive funds are derived through objective analyses of the market is simply not true, in reality index funds are “passive in name only.” Selection criteria are created by fund managers, and their methodologies shift regularly. It is past time for fund managers to think seriously about how climate change is a crucial criterion.

Studies have shown that Indigenous peoples are the best protectors of forests, and that when Indigenous peoples’ rights to autonomy and self-determination are respected, the territories they control remain biodiverse and intact. Given that deforestation is the second largest driver of climate change worldwide following fossil fuel extraction, prioritizing Indigenous rights is a crucial part of protecting the world’s rainforests, which are some of the most important strongholds for climate change mitigation. 

Just as BIPOC people have been challenging the white supremacist legacy of slavery in the United States for centuries, Indigenous peoples in the Amazon have been fighting for centuries to defend their ancestral territories from colonialist exploitation and invasion. The exploitation of the Amazon today continues this pattern of colonialism and environmental racism. Almost all of the crude oil and agribusiness industries currently operating in the Amazon are owned and financed by European or U.S. corporations. This is why our work to get major financial institutions like BlackRock to stop financing the destruction of the Amazon is anti-colonialist and anti-racist work.