As per the tradition, <\/span>BlackRock\u2019s annual letter to its clients<\/u><\/span><\/a> gives a strong indication of how it stands on climate issues. The 2022 edition published on February 3rd was a first: BlackRock made a strong plea that all investors must now choose not <\/span>if <\/i>but <\/span>how<\/i> to manage the transition ahead. Ironically, the biggest asset manager in the world fails to specify how it will mitigate the disastrous impact of its investments at its own level, investments which currently enable fossil fuel expansion plans incompatible with a 1.5\u00b0C transition pathway. It\u2019s time to choose: Blackrock cannot aspire to be the ‘world’s leading expert’ in net zero all the while massively supporting fossil fuel expansion.<\/span><\/b><\/span><\/p>\n<\/div> While BlackRock calls in the letter for strong government action (1) to address fossil fuel demand and stresses governments\u2019 responsibility in shaping the transition, it also makes it very clear that it is in its clients\u2019 best interests to consider climate in every investment decision (2). The letter also shows that BlackRock is prepared to profit as much as possible from what it calls the transition.<\/span><\/p>\n The word \u201copportunities\u201d is used 16 times and it is made clear that BlackRock is seeking to encourage investments in the carbon-intensive companies that are, in its view, transitioning. What is lacking here is any mention of the fact that investors across the globe are still increasingly moving their money towards unsustainable investments. If it is of course crucial that investments continue to flow to transitioning carbon-intensive companies, BlackRock should not ignore the other side of the picture.<\/p>\n<\/div> BlackRock says we will need \u201cshades of brown\u201d to go green. It stresses several times the need to keep investing in oil and gas if the companies are transitioning and are \u201cleaders in decarbonization\u201d, but it does not clarify in the letter which criteria it considers to identify them. What is clear is that its outlook of the energy sector, provided in a separate report<\/a><\/u>, is very misleading and simplistic. On one hand, it overstates the need for continued oil and gas capex and the role of gas in the transition (2). On the other hand, it ignores the most important conclusion of the IEA NZE: the need to stop opening new fossil fuel supply projects, with the exception of those that received approval by end 2021.<\/p>\n While it is defendable to remain invested in companies involved somewhat in brown activities, it is crucial for the most powerful investor in the world to recognize that:<\/p>\n By keeping a blind eye on its investees\u2019 reluctance to stop opening new fossil fuel supply projects, BlackRock is actually not contributing to an orderly transition (3) but is increasing transition risks and physical risks.<\/p>\n<\/div> BlackRock says in the letter that \u201cwithholding capital or divesting from [carbon intensive companies leading decarbonization within their industries] is counterproductive to the transition\u201d. But it does not say how it intends to use its power to not let the other firms, those it would consider as the opposite of decarbonization leaders, slow down the transition. What is BlackRock concretely going to do regarding fossil fuel companies that are still opening new oil and gas fields or launching new coal projects? How will it deal with companies that are increasing their fossil fuel production against all climate odds? How will it deal with banks directly supporting these companies?<\/span><\/p>\n The very definition of which companies are decarbonization \u201cleaders\u201d vs \u201closers\u201d is also absent, which makes the letter a useless paper tiger.<\/p>\n In sum, the letter reflects that BlackRock completely ignores the real game changer for the climate this year: fossil fuel expansion. While its coal policy adopted in 2019 was a first step towards recognizing its responsibility to exclude climate laggard companies (4), it still left the door wide open for companies developing new coal projects.<\/p>\n A meaningful way for BlackRock to kickstart the year as the \u201cleading expert\u201d it wants to be on climate would be to immediately exclude coal developers from all its funds and to clearly set a red line that investee companies must stop their fossil fuel expansion plans. The publication of clear guidelines on how it will use its investment stewardship tools to this end is a must-have for BlackRock. With no changes, the truth is that BlackRock is and will remain the biggest support of fossil fuel expansion.<\/b><\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>BlackRock says investors will seize \u201cinvestment opportunities\u201d if they consider climate risks<\/p><\/h1><\/span>
BlackRock has a problematic definition of brown activities<\/h1><\/span>
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BlackRock is far from having set any red lines for unaligned activities<\/h1><\/span>