Climate Week is happening in New York this week. We expect to see a lot of financial players boasting their climate commitments while the impacts of climate change have never been more devastating around the world. Among them, BlackRock, CalPERS and CalSTRS have a special place: they have all adopted a feeble coal policy that they strongly defend. A growing mobilisation is targeting them to stop their indefensible support to the worst climate killer companies on Earth.
BlackRock: excluding a little part of the coal industry from a small share of assets
BlackRock made the headlines earlier this year in January with its adoption of a coal policy, getting global media coverage with headlines such as “BlackRock exits thermal coal investments” or “BlackRock dumps thermal coal”. An analysis by our German partner Urgewald showed that, in reality, the 25% exclusion threshold used only for the coal mining sector—and not the coal power sector—excludes less than 20% of the companies in the Global Coal Exit List. Moreover, the policy only applies to active investments, and not passive investments, covering less than a third of the $7 trillion of assets BlackRock manages.
In an interview with McKinsey this spring, Larry Fink, CEO of the world’s biggest asset manager, spells out his thought process: “The answer is not to think that we can just run away from coal worldwide. It is to create better science and technology to find ways to help make coal cleaner.” This view explains why BlackRock’s coal policy is so inadequate: global investors should focus on stopping any coal expansion and ushering the retirement of the coal fleet to keep a chance to reach the climate objectives of the Paris Agreement.
This policy does not stop BlackRock’s continued investment in companies still planning to develop new coal mines, coal plants, or coal infrastructure. Reporting from September 2019 shows that the global asset manager had invested $17.6 billion in 86 coal plant developers. BlackRock’s policy also allows it to continue investing in the biggest coal players. What is worse, the asset manager has no phase-out strategy to exit the sector by 2030 in the OECD and 2040 worldwide. This explains BlackRoc’s dismal score in our Coal Policy Tool—0 on all criteria except one, where scored 1 out of 10.
These inadequate measures also explain why the divestment movement targeting BlackRock is growing by the day. Actions took place in the past few days across the United States, from Boston to Palo Alto and San Francisco, where activists projected images of the California wildfires on BlackRock’s offices. This mobilisation will only continue to grow in the coming weeks and months.
CalPERS and CalSTRS: proud to continue supporting and engaging with coal developers
CalPERS, the public pension fund of many Californians, adopted its coal policy way before BlackRock, back in 2015. However, it has a higher exclusion threshold, 50%, and the same giant loophole: it only covers the coal mining sector, and not the coal power sector. Our partners at Fossil Free California highlighted this in a new report published earlier this month and entitled “CalPERS Continues to Invest in Coal.” They revealed that, as with other global investors, the pension fund increased its coal exposure since 2017, with 6.5 billion dollars invested in companies across the coal value chain not meeting its coal mining exclusion threshold.
In response, CalPERS used the word “baffling”. The global and universal asset owner defends its engagement strategy, claiming that it is “delivering results,” with commitments to decarbonise by companies such as Glencore or Duke. This is striking at a time when wildfires, fuelled by climate change, are raging across California and engulfing CalPERS own offices. Such deficient commitments are insulting in the face of the climate emergency.
CalPERS’ Net Zero Asset Owner Alliance pledge to align its portfolio with a 1.5-degree trajectory loses credibility in light of its continued support to the worst climaticidal companies: those expanding the coal industry. The US’ biggest state pension fund uses exceptions to continue engaging with Exxaro, Banpu, Adaro. These companies are planning to expand their coal mining and coal power operations in South Africa, Indonesia, Mongolia, Australia and China. CalPERS also owns shares or bonds from 59 other coal developers such as China Energy, DMCI, New Hope, Vale, Mitsubishi, Mitsui, Itochu, or Sumitomo.
CalSTRS is in a similar position, praising its approach to engage with fossil fuel companies while it had invested $666 million in 52 coal plant developers according to the latest data available from September 2019.
All these companies have no place in a world with a safe climate since they are publicly betting on the failure of the climate objectives of the Paris Agreement. A significant number of progressive investors are drawing a red line and divesting coal developers, rather than wasting time and choosing whether to engage them. It is time for BlackRock, CalPERS and CalSTRS to follow the lead of other institutional investors such as Amundi, to adopt a robust coal exit policy, or face a growing and determined public mobilisation.
With a very poor coal policy, CalPERS and CalSTRS score 0 on all criteria of our Coal Policy Tool except one where it is scored 1 out of 10.