Larry Fink tells companies to prepare for a zero-emission world. The CEO of BlackRock, the world’s largest asset manager, told executives at his portfolio companies to present their plans to reach net carbon emissions by 2050 and show that their board of directors reviewed the plans.
“There is no company whose business model is not deeply affected by the transition to a zero net economy – one that emits no more carbon dioxide than it removes from the atmosphere by 2050, the scientifically established threshold needed to maintain global warming below 2 ° C, “Fink wrote in his annual letter to CEOs on Tuesday.
BlackRock made waves last year when it said it would put environmental sustainability at the heart of its investment strategy, including divestment from fossil fuel producers. The Blackrock movement, with a portfolio of more than $ 7 trillion, is effectively pressuring other financial firms to increase their own climate commitments, according to environmentalists.
“The signal becomes indisputable for the boardroom that ordinary finance truly views climate risk as a financial risk and it is their job to create and disclose credible transition plans,” said Ben Ratner, senior director of EDF + Business, a partnership between Defense Fund and undertakings undertaking to decarbonise.
Hundreds of companies and dozens of countries are committed to zero carbon emissions by the middle of the century. Few, if any, have achieved this goal. Google’s Alphabet unit, for example, announced in September that it had eliminated its full contribution to climate change through carbon offsets – a technique by which companies pay for carbon reduction projects, such as planting trees or catching spills. gas, to help counteract the evening. gases that they themselves emit.
Ratner said BlackRock’s call for specific plans could lead companies to disclose details they have so far avoided disclosing.
“Even though there has been a big wave of net-zero promises … in many cases, details are not yet available on plans to achieve this,” he said.
It’s hard for lay people to distinguish between a company that really reduces its emissions and one that has good marketing, Ratner added. ” [sustainable] the investment landscape is a bit wild nowadays, “he said.
BlackRock itself has been called in: the company still has a $ 85 billion coal production stock due to a gap in its climate commitment, the Guardian recently reported. He was also accused of fueling deforestation in the Amazon by investing in companies operating in Brazil’s most endangered natural resource.
Meanwhile, activists have embraced disinvestment as a way to prevent environmentally destructive projects, 350.org founder Bill McKibben famously wrote that “money is the oxygen on which the fire of global warming burns.” Universities and public pension funds have followed suit, with two public pension funds in New York moved this week to take out investment in fossil fuels.
No less powerful than the Federal Reserve recognized the dangers of climate change, last year designating it as a systemic risk and joining a network of global regulators dedicated to policy research and response.
Continuing the drop
US carbon emissions fell by an unprecedented 10% last year, the largest such decline since World War II, reflecting an extremely unusual spring, when industry and transit stop under residence orders at domicile at national level. Removing the worst effects of climate change, which has contributed to hundreds of thousands of deaths and caused billions of dollars in damage, would require reducing emissions by approximately this dramatic amount each year by 2050 – while avoiding the impact. negative economic and social blockages.
For Fink BlackRock, the response to the coronavirus pandemic creates a possible climate action pattern.
“The pandemic presented such an existential crisis – such a strong memory of our fragility – that it led us to face a stronger global threat of climate change and to analyze how, like the pandemic, it will change our lives.” , Fink wrote. “It reminded us how the biggest crises, whether medical or environmental, require a global and ambitious response.”
In other words, decisive action is needed from governments. Many nations, especially in Europe, have pledged to meet the challenge by linking economic recovery funds to environmental measures, while US activists are pushing the new Biden administration will move aggressively on the climate.
“It’s a fantasy to believe that even Wall Street can help create decarbonization on its own,” Ratner said. “Climate change is such a big issue that it requires governments, corporations and communities, all paddling together.”