Financial solutions for catastrophic problems
In 2020, BlackRock promised to make sustainability its new standard for investing. The firm has taken a few steps forward, but they’re not enough. The climate is running out of time.
All talk, not enough action.
A visionary financial leader takes responsibility for the destruction its portfolio enables, even as an advisor and fiduciary. Technicalities are irrelevant in the face of global climate breakdown. Leaders that invest in destruction also magnify the economic risks of climate change. We need bold action to lower global emissions – immediately.
BlackRock has unmatched economic influence. A full industry transformation can’t happen overnight, but asset managers can use their power to accelerate change now. The financial solutions that will slow and even mitigate climate change are feasible. They are possible. And they are utterly necessary.
BlackRock and other asset managers have the capacity to become global climate leaders. There are five essential solutions to BlackRock’s climate problem.
Exclude climate-harming companies from active funds
BlackRock’s thermal coal exclusion policy is a step in the right direction, but it’s not even close to enough. BlackRock must expand its coal exclusion criteria to incorporate the Global Coal Exit List. It must also expand its exclusion criteria to include other fossil fuel and climate-harming commodities, starting with tar sands, and Arctic and Amazon oil.
Expand pro-climate engagement and voting
BlackRock’s engagement must focus on decarbonization, not just disclosure. That means BlackRock must consistently use its shareholder power to align companies with scientific targets, including voting for climate resolutions and acting against boards of directors that aren’t making sufficient progress on climate. BlackRock’s engagement with companies must be transparent, with clear, science-based deadlines and ambitious timelines for change.
Adopt a global baseline climate standard for ESG
BlackRock must ensure that its “sustainable” funds are truly sustainable. Fossil fuels, forest-risk commodity companies that have not demonstrably implemented zero-deforestation commitments, and companies that drive catastrophic climate change will never be sustainable and must be removed from all environmental, social, and governance (ESG) funds.
Promote human and Indigenous rights
BlackRock must adopt a policy that recognizes the rights of Indigenous peoples. This should include a deforestation policy that addresses not only climate impacts, but standards for human rights and the land rights of Indigenous peoples. This policy should be applied universally across all extractive sectors that threaten the rights of Indigenous peoples, local communities, and traditional landowners.
Offer climate funds by default
BlackRock should provide fossil- and deforestation- free funds as the default option for all investors and clients across its product offerings. Removing climate destruction from active funds is a step in the right direction, but its impact will be minimal if BlackRock doesn’t tackle the climate problem in its passive funds. This is what real financial leadership looks like.