BlackRock makes climate change central to investment decisions

BlackRock takes tougher stance on climate after activist heat

The chief executive of global investor Blackrock says the company is reorienting its investment strategy, recognising "climate risk" and focusing on portfolios that integrate sustainability criteria.

In his annual letter to chief executives, BlackRock chief Larry Fink said the investment industry was facing a "fundamental reshaping".

Referring to the Extinction Rebellion protests, he added: 'Last September, when millions of people took to the streets to demand action on climate change, many of them emphasised the significant and lasting impact it will have on economic growth and prosperity - a risk that markets have been slower to reflect.

The shift due to BlackRock is considerable.

Climate change has become the main issue raised by customers, Fink said, and will affect everything from municipal bonds to long-term home mortgages.

BlackRock will also seek to double the number of sustainability-focused exchange traded funds it provides to 150 and increase sustainable assets from $90bn to $1trn within the next ten years.

Fink, in his letter, said his career spanned numerous crises from the dot-com bubble to the inflation spikes of the 1970s to the global financial crisis, but climate change represented a different, longer-term risk.

While rampant forest destruction is a major cause of climate change, forest protection is an equally powerful solution. Even if only a fraction of the projected impacts is realised, this is a much more structural, long-term crisis. "In the near future - and sooner than most anticipate - there will be a significant reallocation of capital", Fink predicted. The firm has come under fire from climate activists for its reticence to respond to climate change, as well as the tens of billions of dollars it has invested in companies producing fossil fuels or contributing to Amazon deforestation. This is one reason why'. "Companies and countries that favor transparency and show their responsiveness to stakeholders, on the other hand, will attract investments more effectively, including better quality, more patient capital".

It still has billions of pounds of investors" money sitting in passive funds, which simply track an index and do not differentiate between environmentally "good" and "bad' companies.

The Extinction Rebellion movement was less welcoming of BlackRock's announcement. "And the truth is that the world's biggest miners and polluters will not be losing any sleep over this", it said in a statement on its website.

BlackRock continues to be the world's largest investor in fossil fuels and the world's largest investor in deforestation-linked commodities, which are the second leading driver of the climate crisis after fossil fuels. We do not write articles to promote products.



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