The world’s biggest investment manager BlackRock has said it will sell-off its shares in coal firms and other major polluters as it called for a ‘fundamental reshaping of finance’ to tackle climate change.
Chief executive Larry Fink warned company boards they must step up efforts to tackle climate change in his annual letter to business bosses.
Fink said they need to act or will face increased wrath from investors concerned about how unsustainable business practices might cut their future wealth.
Laurence ‘Larry’ Fink, chief executive of BlackRock, during a panel session at the World Economic Forum in Davos
He said BlackRock itself, which looks after $7trillion of clients’ money, will exit investments that present ‘high sustainability-related risk’, including thermal coal producers.
Fink’s intervention comes at a time when City firms are increasingly facing pressure to do more to combat climate change.
Large asset managers such as BlackRock own vast quantities of shares and therefore have a great deal of leverage over companies which means they can influence their business decisions if they wish to.
However BlackRock and investment heavyweight peers such as Vanguard and State Street have been criticised for not doing enough to guide the firms they invest in up until now.
‘We don’t yet know which predictions about climate change will be most accurate nor what effects we have failed to consider,’ Fink stated in the letter. ‘But there is no denying the direction we are heading. Every government, company and shareholder must confront climate change.’
BlackRock, which looks after $7trillion of clients’ money, will exit investments that present ‘high sustainability-related risk’
He went on the say that questions around climate change are driving ‘a profound reassessment of risk and asset values’.
‘In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.’ Fink added.
The letter also specifically aligned BlackRock with the goals set out in the 2016 Paris climate agreement despite this not being the official policy of its home nation the United States, which under President Donald Trump has backed away from the accord.