BlackRock’s latest climate instructions highlight that the fossil fuel industry should set targets to cut emissions and reach net zero. But most oil and gas majors have already committed to net zero carbon by 2050, while still continuing to invest heavily in new fossil fuel projects.

BlackRock should push fossil fuel companies to immediately end expansion plans and prepare a complete phase-out of fossil fuels, and not just “explore alternatives”. Climate science tells us that fossil fuel production must decrease by 6% annually starting now and leaving room for speculative bets on negative emission technologies could slow down this necessary reduction.

BlackRock is also leaving the door wide open for shaky net zero targets. Making investments in carbon offsets and carbon capture and storage (CCS) technologies is acceptable as a complementary tool. However, it should not be used by fossil fuel companies to justify a slower reduction of GHG emissions or to keep launching new projects. If not coupled with a commitment to end all investments in new fossil fuel projects, especially high-risk projects in unconventional oil and gas, and a plan to progressively close fossil fuel assets, CCS and carbon offsets risk triggering high warming overshoots. By failing to define exactly how companies might rely on CCS and offsets, and not putting limits on the extent of its use, BlackRock gives free rein for any polluting company to artificially reach “carbon neutrality”.

There are worrying signs elsewhere, too. Cleaner alternatives for fossil fuel companies do not mean gas, and betting on CCS should not hide the need to reduce absolute emissions now. Similarly, hydrogen should mean “green hydrogen” produced in a sustainable manner without relying on fossil fuels.

Finally, it is still unclear when and how BlackRock will take action against climate laggards. Its only promise is that it “may” vote negatively in the future. The sanction for companies with no forward-looking fossil fuel phase-out plans should be systematic negative voting against directors and divestment if there is no change in the short term. 2021 will show how serious BlackRock is about using its financial clout to threaten the fossil fuel industry. Right now, it’s not even close to having a robust coal policy.

Lara Cuvelier, Sustainable Investments Campaigner at Reclaim Finance, said:

“Once again, BlackRock is putting a lot of effort in convincing us that it can manage climate risk and help companies to do the same. But we still don’t see concrete steps to limit the impact of its own investments on climate and take the urgent action required. While BlackRock recognizes the need to head towards a fossil fuel free economy and the need for companies to adopt short-term emission reduction targets to get there, the asset manager is still heavily invested in companies launching new fossil fuel projects, despite these being completely incompatible with a 1.5°C pathway. If BlackRock wants to align its practices with its lofty rhetoric, it needs to offer concrete, urgent measures to decarbonize its investments. It should start by reviewing its coal policy to ensure that it applies to all its assets and that companies that are still developing new coal projects are kicked out of its portfolios.”