Climate Change

$7 Trillion Asset Manager Shifting to Climate Change

JM Ashby
Written by JM Ashby

Good news -- the largest asset manager in the world is shifting their focus to climate change and will factor it into all future company decisions beginning with a decision to completely divest from the coal industry.

BlackRock, which manages over $7 trillion in funds, also says they will require all future clients to disclose their risks and exposure to climate change. BlackRock sent a letter to all CEOs with assets managed by the company to inform them of the news today.

The New York firm is taking immediate action, exiting investments in coal used to generate power, and it will begin asking clients to disclose their climate-related risks.

“Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself,” [CEO Laurence Fink] wrote in the letter. “In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.” [...]

“Over time, companies and countries that do not respond to stakeholders and address sustainability risks will encounter growing skepticism from the markets, and in turn, a higher cost of capital,” Fink wrote. “Companies and countries that champion transparency and demonstrate their responsiveness to stakeholders, by contrast, will attract investment more effectively, including higher-quality, more patient capital.”

I feel like this should have come sooner rather than later because there's no greater financial risk factor than the end of the world as we know it, but it's better late than never

Private capital and asset managers are moving quicker to address climate change than the U.S. government because they do not have the political ambitions and calculations of Republicans getting in their way. The Trump regime has taken every step it can to prolong the life of the dying coal industry for political reasons while capital managers are divesting from it.

When a company the size and reach of BlackRock accepts climate change as an empirical reality and factors it into their business decisions, it exposes political parties and governments that still won't take the problem seriously or even acknowledge its existence. People who only answer to the hard reality of dollars and cents are stating very clearly that climate change is a risk to those dollars.

Even if the next president is a Democrat, I have some fear that they won't be able to get an ambitious climate plan through Congress even if Democrats retake control of the Senate. If Republicans retain control of the Senate, the next president won't be able to do anything.

  • muselet

    You can fool all of the people some of the time, and some of the people all of the time, but you can’t fool money.

    Not for long, anyway.

    This is something that should have happened decades ago, about the time the atmospheric carbon dioxide level went above 300 ppm, but it’s good to know someone cares, at least a little bit, about climate change. Oh, sure, it’s a cynical sort of caring which is more about profits than habitability, but I’ll take it.

    What’s the over/under on when Rs will accuse BlackRock of being a librul socialistical Democrat-run! company that’s in league with the Chinese climate hoaxers?

    –alopecia