It signaled a shift in how the risks of climate change are viewed by investors, and indeed, amid the distractions of the pandemic, it kicked off a year of landmark commitments by companies and countries-from Japan to Royal Dutch Shell-to target net zero emissions by 2050. The company also launched a tool, Aladdin Climate, to help investors assess the amount of climate risk in their portfolios.įink’s statement last January that BlackRock would reassess its own investing strategy, make sustainability central to its portfolios and risk management, and exit investments including thermal coal producers, was touted as a watershed moment for the $8.7 trillion asset manager, and for Wall Street. Sustainability at its coreĢ020 brought a wave of new investment products: BlackRock said it had launched 93 “sustainable solutions” last year, drawing in $39 billion and increasing its own sustainable assets by 41% year-on-year. BlackRock’s own BGF Sustainable Energy Fund was a top performer, as Fortune reported in October-over 2020, its total return was 50.42%. The company also said that 81% of a globally representative selection of sustainable indexes funds had outperformed benchmarks over the course of the year, particularly during the rocky early months of 2020. From January to November 2020, investors in mutual funds and ETFs poured $288 worldwide into ‘sustainable’ assets, he said-an increase of 96% over all of 2019. Indeed, investing tied to “sustainability” has quickly become big business. One year after Fink wrote that “climate risk is investment risk,” the executive said that the COVID-19 pandemic had not distracted companies from climate risk, and instead, “the reallocation of capital accelerated even faster than I anticipated.” He also framed the climate transition as a “historic investment opportunity.” In such a case, what’s the proverbial stick BlackRock would be wielding? It would use its shareholder clout to vote against the management of those laggard firms in its index portfolio-held shares, or it would drop the companies entirely from its actively managed portfolios. In an accompanying letter to clients, BlackRock warned it would take action against those companies that have a high carbon intensity, and which do not align with its own net zero goals. In his annual letter published on Tuesday, Fink also said that the companies would need to lay out how exactly such a target is incorporated within their long-term strategies, and how it will be reviewed and measured by individual boards.

Larry fink blackrock letter to ceos