BlackRock’s Larry Fink takes private jet to Davos to warn of climate risk to investments
WITH almost $6.9 trillion (£5.3tn) of assets - equivalent to 8% of Global GDP - BlackRock’s management, founder and chief executive Laurence D. Fink’s statement that “climate risk is investment risk” got wide news attention. Fink might arguably be able to influence/shift market sentiment and investment behaviour towards more sustainable asset classes in what he proclaims as “our new standard for investing”, while investors in BlackRock products may (or may not) “reassess core assumptions about modern finance.”
However, with significantly large holdings in oil and other fossil fuel companies, the Sierra Club again reminded us last week of serial and serious ongoing transgressions by BlackRock. “In the past, BlackRock has used its enormous financial leverage to support fossil fuel CEOs and spike climate-critical shareholder resolutions. Last year it voted against every single resolution backed by the Climate Action 100+ investor coalition, the same group that BlackRock just [in Fink’s 2020 letter to CEOs] committed to join.”
I wonder if there might be something of an actual and ongoing hypocrisy and disconnect between BlackRock public statements and company actions? Even since issuing his clarion call, it is peculiar to find that nonetheless Fink is flying by private jet to Davos to discuss [January 21] sustainable investments. Having sent his (annual) letter to the CEOs of 200 Top Global companies stating that moving forwards investment decisions need to have environmental sustainability as a core goal, if actions are to speak louder than words then why travel to the World Economic Forum in Davos, Switzerland to discuss it in person? Though WEF is claimed to be carbon-neutral in 2020 (and, indeed, plans to produce a manifesto for ‘a cohesive and sustainable world’), surely there are enough directors on the 18 person Board of Directors of BlackRock with sufficient independence or sincerely held concern able to assert their new found fossil-fuel freedom to kick open their environmental sustainability door and suggest to Mr Fink that he instead teleconference into this Davos event? I am pretty sure that event sponsor IBM help produce products that might assist with such teleconferencing matters. Do as I say not as I do is rarely a good look when it comes to fossil fuels, climate breakdown or private jets.
Perhaps where Fink can better assert and demonstrate the sincerity of his conversion to cause of sustainable investments is in the operation and corporate governance of BlackRock itself? Particularly in regard to own activities - from investments practices, lobbying to the behaviours and composition of its executive board members and their constituency of other companies still actively investing in fossil fuels. Brown suggests that some real tests of Finks conversion to sustainable investment could include:
Ensuring that BlackRock votes against the boards of companies in which they invest when they do not make sufficient verifiable progress on sustainability related actions, disclosures and practices
BlackRock to market more sustainability friendly investment products (while prioritising their selection by clients via the language used and position on choice menus) while also actively eliminating products and companies from its $4.6trn portfolio of index funds and exchange-traded funds
Publish quarterly audit of BlackRock investment portfolio profile by product on investments/divestments in non-carbon, sustainable & fossil fuels
The diverse Board of Directors of Blackrock includes Directors of many other serious companies. Fink should insist as a condition of service on the BlackRock Board of Directors that these companies and businesses are also verifiably committed to divestments and the cause of sustainable investing?
BlackRock should lobby individual governments to shift the sustainable investment dial (including the Trump Administration and Saudi government)
Image credit: nationalcenter.org