BlackRock will divest from coal and incorporate several other environmental, social and governance (ESG) initiatives, in a major turning point for one of the world’s largest investment firms.
In separate open letters sent out to the chief executives of companies they invest in and their own clients, Larry Fink, chair and chief executive of BlackRock, said climate change had become a defining factor in companies’ long-term prospects.
“Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect,” Fink said.
They would completely divest from thermal coal and were currently in the process of removing companies that generated more than 25% of their revenues from thermal coal production by the middle of the year.
“Thermal coal is significantly carbon intensive, becoming less and less economically viable, and highly exposed to regulation because of its environmental impacts,” Fink said.
“With the acceleration of the global energy transition, we do not believe that the long-term economic or investment rationale justifies continued investment in this sector.”
BlackRock would begin to offer sustainable versions of their flagship model portfolios and iShares, as well as take more steps to make sustainable investments the standard.
They would also aim to double their offerings of ESG exchange traded funds (ETFs) in the next few years to 150.