18 Feb 2020 BlackRock’s Sustainable Investing Push
BlackRock CEO recently announced he will take action towards a more sustainable investment.
Whereas, in the early stages, responsible investing meant excluding from portfolio highly controversial and problematic stocks, such as gunmakers. Nowadays, responsible investment means selecting carefully the assets in portfolio and constantly monitoring to be investing in companies that behave in a sustainable way, respect human rights and environmental standards and commit to have a positive impact on local communities. Whereas public movements such as Fridays for Future heavily put the lights on the crucial issue of climate change, behaving responsibly has become a necessity for companies in order to avoid reputational damages as well as often huge fines.
In response to mounting public pressure, Larry Fink, CEO of BlackRock, the world’s largest asset management fund with $7tn of assets under management, announced, in a letter to investors, that the firm will make policy changes related to climate change and cut its investments from companies that make a relevant amount of revenues from thermal coal production. During past years BlackRock has faced criticism for the losses incurred in betting on oil companies: among those who criticized the company for its behavior there is the Institute for Energy Economics and Financial Analysis (IEEFA), as we mentioned some time ago.
Climate change is finally perceived as a systemic risk by institutional investors also for the long-term sustainability of their portfolios and actions have to be taken in order to avoid further damage. “Investing in a company that doesn’t disclose its pollution is like investing in a company that doesn’t disclose its balance sheet” said Christopher Hohn, head of activist hedge fund TCI. Now that even the world’s largest asset management fund has taken actions, responsible investing is becoming mainstream and we hope this commitment will raise the bar and the responsible investing standards.
For further information, see the following links:
https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter
https://www.fool.com/investing/2020/02/14/how-big-a-deal-is-blackrocks-sustainable-investing.aspx
https://www.ft.com/content/362fdc36-3b97-11ea-b84f-a62c46f39bc2