BlackRock shifts investment strategy to tackle climate change

BlackRock CEO Larry Fink pledged Tuesday to ditch some environmentally harmful investments as part of a plan to combat climate change, which he expects will spur a “fundamental reshaping of finance.”

The shift by the world’s largest investment manager came amid environmental activists’ efforts to pressure financial institutions to take on a bigger role in combating the growing climate crisis.

“Even if only a fraction of the projected impacts (of climate change) is realized, this is a much more structural, long-term crisis,” Fink wrote in his annual letter to CEOs. “Companies, investors, and governments must prepare for a significant reallocation of capital.”

Fink said BlackRock — which has about $7 trillion in assets under management — will exit investments that pose a “high sustainability-related risk,” such as companies that generate more than a quarter of their revenues from thermal coal production.

BlackRock will also take actions to hold corporate boards accountable — such as potentially voting against directors and management — if they don’t adequately account for climate-related risks, Fink said.

He specifically called on companies to publish plans for how they will operate if world leaders achieve the goals outlined in the 2015 Paris climate accord, which calls for limiting global warming to less than 2 degrees Celsius.

Fink argued that companies have an “imperative” to tackle climate change as more money flows into the hands of millennials, who will shape the world’s environmental policies as the next generation of business and government leaders.

“Young people have been at the forefront of calling on institutions — including BlackRock — to address the new challenges associated with climate change,” Fink wrote. “They are asking more of companies and of governments, in both transparency and in action.”

Fink’s missive followed climate activists’ efforts to get banks and other institutions to pull their money out of the fossil fuel industry, which they argue is exacerbating the global crisis.

Teenage climate crusader Greta Thunberg and other environmental activists plan to keep up the pressure at the World Economic Forum in Davos, Switzerland, where executives, investors and government officials will gather later this month.

“Anything less than immediately ceasing these investments in the fossil fuel industry would be a betrayal of life itself,” Thunberg wrote in a Friday op-ed in the Guardian newspaper. “Today’s business as usual is turning into a crime against humanity.”

BlackRock’s pledge marked the corporate world’s latest effort to address climate concerns. JetBlue announced last week that it plans to become the first major US airline to go carbon-neutral, while Barclays investors have moved to have the company more quickly phase out fossil fuel financing.

With Post wires

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