BlackRock, the world’s largest investor, has vowed to ditch stakes which carry a “high sustainability-related risk” – including thermal coal production. The move will ramp up pressure on companies to take aggressive action on climate change.
In separate letters published this week, the New York-based investment giant outlined a future strategy including plans to ensure sustainability is key to risk management and portfolio construction. The fund manager will offer new products to screen out investment in fossil fuels and – as a new member of the Climate Action 100+ investor initiative – will aim to push the managers of major corporations to adhere to Paris climate agreement targets.
In its 2020 letter to CEOs, BlackRock chairman and chief executive Larry Fink said the world is on the cusp of “a fundamental reshaping of finance”. He argued “companies, investors and governments must prepare for a significant reallocation of capital”.
A new approach
Fink noted climate change is a “defining factor” shaping how companies chart future investment plans, forcing investors to significantly reassess risk and asset values. The CEO called for an entirely new approach to global investment, underscored by BlackRock’s push to scale back its $17.5 billion investment in coal.
“The goal cannot be transparency for transparency’s sake,” Fink wrote. “Disclosure should be a means to achieving a more sustainable and inclusive capitalism.”
BlackRock’s global executive committee outlined the company’s precise plans in a separate letter to clients. It said the public securities – debt and equity – of companies which draw more than 25% of annual revenue from thermal coal output are already being removed from its discretionary active investment portfolios. The fund vowed to closely examine other companies which depend heavily on thermal coal as an input and promised not to make any future investments in companies which generate more than 25% of revenue by producing thermal coal.
Circular argument
The global investor said it manages $50 billion of assets which support the energy transition and focuses on investments in companies which minimize waste via circular economy business models. The fund’s BlackRock Real Assets unit – which manages more than $30 billion of assets – has already invested roughly $5.5 billion in more than 5 GW of utility scale solar and wind generation capacity worldwide.
Raw material sourcing
In July, BlackRock and U.S. conglomerate General Electric announced plans to design, build, own and operate distributed solar and energy storage projects with the fund manager taking an 80% stake in their Distributed Solar Development joint venture. Last month, the investment manager finalized $1 billion of a record $2.5 billion fund dedicated to investment in solar, wind and energy storage projects.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
2 comments
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.