BlackRock, the world’s largest asset manager, is moving beyond its call for sustainability as “the new standard for investing” to focus even more on climate change and demand that public companies disclose their plans to help achieve a net zero global economy by 2040.
In his latest letter to CEOs, BlackRock CEO Larry Fink writes that “no issue ranks higher than climate change on our clients’ list of priorities. They ask us about it nearly every day.”
Fink, in turn, is asking CEOs to disclose how their own net zero plan is incorporated into their long-term strategy and reviewed by the board of directors. Net zero refers to a policy whereby an economy emits no more carbon dioxide than it removes from the atmosphere so that global temperatures don’t rise more than 2ºC since the Industrial Revolution.
‘Climate risk is investment risk,” writes Fink, repeating last year’s warning. “But we also believe climate transition presents a historic investment opportunity.”
He noted that during the first 11 months of 2020, despite the coronavirus pandemic, investments in sustainable assets by mutual fund and ETF investors around the world surged 96% to $288 billion and that during 2020 81% of a “globally representative selection of sustainable indexes” outperformed their parent benchmarks.
For its part, BlackRock, in its letter to clients, outlined its plans to achieve compatibility with net zero by 2050.
Among its commitments: developing Aladdin Climate to provide a wide range of climate data, risk measurement and implementation capability that help advisors and investors manage their physical risks of climate change and transition risks due to changing policies and technology.