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In January, BlackRock CEO Larry Fink announced that the investment management firm, which holds title as the world’s largest asset manager, would incorporate sustainability as a key investment value. As part of the firm’s new commitment to sustainability, it would sell $500 million in coal-related assets, and create new funds avoiding fossil fuel investments.
On July 14, BlackRock released an investment stewardship report outlining the firm’s sustainability-related actions since January’s announcement. The response among environmental groups, media and other asset managers was mixed.
In the report, BlackRock reported a list of 244 companies it deemed either not doing enough to prepare for climate change, or not appropriately alerting shareholders to the risk climate change poses their operations. The firm voted against re-electing directors at 53 of those companies (i.e., 22%), and declared all listed companies officially “on watch”. The report also noted that BlackRock was engaging in “climate-related engagements” with companies.
BlackRock’s willingness to act to the extent it has is commendable, but as commentators noted, its climate-related actions to date have been tepid, especially considering the firm’s stature. In many cases, BlackRock did not vote in favour of shareholder proposals for climate-related actions or disclosures. It also voted to re-elect directors with terrible track records on climate, as in the case of its vote in favour of re-electing former ExxonMobil CEO and notorious climate skeptic Lee Raymond to JPMorgan Chase’s board.
When Fink announced BlackRock’s commitment to sustainability in January, I was among those holding applause to see if the firm’s actions matched its PR. Finance is a highly conservative industry, and asset managers are likely to suffer severe blowback if investments in less traditional industries, like renewables, yield anything less than expected high returns, whereas clientele often won’t bat an eye if staple investments in oil and gas underperform, since those are such investment mainstays.
BlackRock is in a uniquely strong position to both push large corporations in more sustainable directions, and move money into more sustainable industries. This would, however, require a degree of moral fortitude and commitment to long-term principles financiers rarely display. Indeed, Fink has yet to display either when it comes to BlackRock’s alleged sustainability commitment.