Paris, 26th January 2021
- BlackRock CEO Larry Fink today published his annual letter to its clients, focusing for the second year in a row on climate announcements, including a request for all companies to adopt “net zero” compatible business plans
- Letter omits to mention company’s own massive fossil fuel investments; research earlier this month revealed BlackRock’s $85bn invested in coal including in companies with coal expansion plans
- NGOs Reclaim Finance and Urgewald stress that BlackRock and its clients will fail on their net zero targets if they continue to support the expansion of fossil fuels and call for an immediate review of BlackRock’s weak coal policy
BlackRock’s CEO Larry Fink has called for investee companies to adopt targets of net zero emissions by 2050 and said that action will be taken if such targets are not adopted. Unfortunately, BlackRock has not provided details on what it will consider acceptable regarding fossil fuel companies.The step comes after months of criticism of BlackRock’s climate record, including a report earlier this month by NGOs Reclaim Finance and Urgewald, which revealed the asset manager’s $85bn holdings in coal. Campaigners warn that BlackRock’s continued support for the most polluting fossil fuels undermines any claim to climate leadership.
“Larry Fink’s new net-zero commitment could be a positive step if it were paired with concrete and immediate action to stop investing in new fossil fuels. But a year after its first, extremely weak coal commitment, BlackRock has yet to announce a more ambitious policy. Rather, BlackRock’s $24bn investments in coal expansion are a perfect illustration of how investors can hide behind ESG credentials and net-zero commitments. Whilst new commitments on voting are welcome, there is no time left to engage with companies that are still actively building new coal projects, with climate scientists stating since 2015 that new coal is incompatible with the Paris objectives,” said Lara Cuvelier, sustainable investments campaigner at Reclaim Finance.
Major exposure to coal
Research published in January by NGOs Reclaim Finance and Urgewald shows that despite BlackRock’s pledge to exit investments in thermal coal, $85bn of assets managed by BlackRock are still invested in the coal industry. Among its investees are some of the biggest coal producers in the world such as Adani, with a shocking $24bn invested in companies that have coal expansion plans, such as Sumitomo or KEPCO. And most importantly, BlackRock’s coal policy is not applied to its index funds and ETFs which account for more than $5.7tn out of the $8.6tn the firm is managing (2).
No time left
With COP26 looming, campaigners insist that BlackRock’s priority should be to exit coal once and for all, as a first concrete step towards its 2050 commitment. Larry Fink’s letter, they argue, shows that BlackRock isn’t serious yet about tackling its addiction to fossil fuels, particularly coal, despite a welcome recognition of the need for climate action.
“It’s a positive sign that BlackRock wants to take its immense responsibility for our climate as the world’s largest asset manager more seriously. What is still lacking, however, are concrete steps on how BlackRock intends to exclude Europe’s leading CO2 emitters such as RWE or CEZ or the entire US coal industry from its portfolio. Achieving net zero by 2050 could mean a lot of things, including offsetting rather than actually reducing emissions. To keep up with decent coal policies by other investors such as AXA, Union Investment or Allianz, BlackRock needs to do much more: ditch coal expansionists, start excluding coal power players and lower all thresholds for coal company exclusions close to zero by 2030. As it is now, we just don’t see BlackRock taking enough accountability yet,” remarks Katrin Ganswindt, Finance Campaigner at Urgewald.