Because Blackrock is using a percent of firm revenues metric for coal exposure at these companies, the total market cap of the company’s they are divesting is almost nil so it’s no skin off Blackrock’s back. On the other hand the big players like Rio , Glencore and BHP , which all produce far more coal get a pass , as do the utility company customers. Nothing but some good marketing PR for Blackrock and Fink and completely meaningless and disingenuous. However not meaningless for the employees at those soon to be bankrupt companies as they lose investor sponsorship.
10
No surprising or altruistic revelations here ...just follow the money. Sad that that's what gets the dialogue moving, but whatever it takes, I guess.
13
I was excited about this, and then read this part: "Still, Mr. Fink made plain that while he intends for the firm to consider climate risks, he would not pursue an across-the-board sale of energy companies that produce fossil fuels. Because of its sheer size, BlackRock will remain one of the world’s largest investors in fossil-fuel companies."
I'm underwhelmed now.
24
When $7 trillion talks, we will do well to listen.
While I believe the biosphere is in hospice, I am encouraged that money is waking up to the existential threat our fossil fuel use has created.
Even though we humans continue to aggressively wipe life off this beautiful planet, it is not too late to do the right thing for what may remain - even if it cannot save us.
Let’s follow the money and go down swinging.
9
Late to the party corporate America. Now all you have to do is put your money where your annual letter is. If you don't mind, while your at it, can you give our president a good economic thumping and set him straight of the horrific financial and social costs of climate change. He probably won't believe you because you're a Democrat but it's worth a try.
10
But hold on...what about Khashoggi?
I believe he said that we still don't know who exactly murdered the journalist; there are only theories. This is as he expands into Saudi Arabia...
So how do his letters about social good tie to that statement above? Please don't be fooled by this rhetoric. He's merely pandering to get more AUM.
11
Talk is cheap.
Also cheap - annual letters, aspirations, "commitments to cutting-edge technology", voluntary emissions guidelines, non-binding sustainability goals, paragraphs extolling a corporation's "conscience" on a website, adding green to the company logo.
Also cheap - pledges to meet net zero carbon goals by 2035, 2040, 2050, and total spending by the world's top 25 oil majors on low-carbon energy in 2018 - 1.3% of total budgets of $260 billion.
It appears that Mr. Fink has noted that a destabilized, burning world poses certain new risks to financiers and investors, and said as much to his clients. Uh, duh.
13
Even if Blackrock's decision to go greener is all about profits, I don't care. Whatever works to stop the destruction of our planet is a good thing. Now if we can just rid Washington of Climate Change Denier in Chief.
9
Mr. Fink doesn't plan to get out of fossil fuels completely. The article said:
“'Despite recent rapid advances in technology, the science does not yet exist to replace many of today’s essential uses of hydrocarbons,' he wrote."
However, renewable energy can replace fossil fuels for many uses. Is BlackRock investing in stocks in renewable energy and energy efficiency companies?
4
@Eleanor H. good point. I think as a follow on BlackRock should give real data on a quarterly basis of how they are striving to meet their "annual letter" goal of investing in companies that have real trackable sustainability metrics in place and can show what they are doing to mitigate climate change.
5
I run a financial services company and I published a book in 2013, and updated last year, showing that people would benefit from divesting from fossil fuel stocks." Low Carbon Investing: Defending the Climate/Focused on Performance."
This has been true for at least a decade - it's just taken the big firms this long to wake up and smell the fossil fuel laden coffee, and rouse themselves to action. They've been putting US clients into passive S&P 500 Index funds for centuries (that's what it feels like). 10% of that index consists of fossil fuel companies. if as an investor you do nothing else. getting rid of S&P 500 funds and also the Vanguard total stock market fund are great first steps.
11
Coal mining stocks are an easy target. But will Black Rock divest from oil and gas, car companies, airlines, airline manufacturers, transportation companies, home builders who build McMansions, companies that invest in or have operations in emerging economies like China and India, banks that invest in companies that aren't 'woke' --
It becomes quickly apparent that trying to avoid investing in companies that don't have a great carbon footprint or aren't sustainable, can eliminate a lot of potential investment opportunities. What about McDonalds? All that beef, all that shipping, all those cars idling in line...
If BlackRock doesn't invest in companies that aren't sustainable enough for them, but they are profitable growing companies, other investors will. From a pure investment strategy this isn't a particularly good idea. If you take all the companies across the globe with a market cap of 10 billion or more, and created a portfolio of companies seen as having a small carbon footprint, and another with large carbon footprints -- which portfolio would outperform? Is Fink doing his best for his investors? He has a fiduciary responsibility and if BlackRock underperforms the market, people will put their money elsewhere.
4
The moving to reduced carbon energy sources without trashing the economy is the elusive detail that it seems no one is discussing.
4
@John Mardinly Oh please, it's discussed extensively. A huge amount of work has been done over the years that demonstrates pathways for a transition to a nearly zero-carbon energy system by 2050 that would actually significantly improve the economy. It's beyond dispute that failing to act will cost several points in GDP growth over the long term, but the challenge is in the short- to medium term. The pathways are not as extreme as some suggest - the answer is almost certainly not 100% renewables though it will involve quite a high share of renewables - but acting like "no one is discussing it" is what's keeping us from doing it. Get off your tush and go looking for the solutions instead of aping the fossil industry's talking points. You'll them.
12
@John Mardinly Sorry, I meant to close with "you'll find them."
1
Its good for business to virtue signal. Look at all those European countries that are in the Paris Accords, none of them are in compliance.
6
We are so good at kicking the can. Let the aging investors pass the clean-up to the next generation, when they take "the helm of government and business."
What prevents us from taking action now? Trump, Koch Industries? If human progress ceased because of influential fools, we'd still be living in caves.
Every investment should be a socially and environmentally conscious investment. As soon as politically feasible, which hopefully is soon, (1) a tax on carbon, (2) 2% of GDP invested in the transition to clean energy economy.
9
@GimmeShelter Agree. Take a look at the Energy Innovation and Carbon Dividend Act, HR 763, now before the House (https://energyinnovationact.org), as well as several other carbon tax bills in both houses of congress. A predictably rising carbon tax would enable business leaders to "do the right thing" for good fiduciary reasons while protecting their children's future.
4
@PJMD what responsibility is greater than that of leaving a sustainable planet to our children? A tax cut, conservative judges, your 401K? Insanity.
3
Yes, all of the environmental protests are not even close to when the $$$ stops. That is the key element to this whole disaster, $$$ and greed.
If you cut off the money then the crimes will stop.
8
Black Rock just became a more attractive option for me, so I hope others follow quickly before I have to move my money.
5
I will believe it when I see it. Corporations lie through their teeth.
4
Fossil fuels still have a place in the industrial stream, for their other uses besides the burning of them. There is a large need for oils, greases and polymers gained from those old plants compressed and buried all these eons. Plant based products can't hold up to the stresses for all applications. As well as the uses for Natural Gas as a stop gap in the energy stream till all the planet uses more solar and safer Fission Reactors, of which there are several designs we haven't used, that have been done in small scale.
So while he is aware there is an issue called Climate Change, and it is happening now, not in 5 to 20 years, but right this second all around us, his job is to make people richer.
Welcome fair traveler, this is Earth a once great place to live, wish you were here back then? Travel to new Eden while the ship's are still loading.
1
This graph seems to conflict with a lot of what precedes it: "Still, Mr. Fink made plain that while he intends for the firm to consider climate risks, he would not pursue an across-the-board sale of energy companies that produce fossil fuels. Because of its sheer size, BlackRock will remain one of the world’s largest investors in fossil-fuel companies."
5
#adorable. pretty easy to disinvest from a dying industry or a sector with low growth vs. other industries and sectors with high growth. When they start using their wallet share to force Apple to abandon FoxConn or Amazon to allow people to micturate in an actual bathroom as oppossed to a bottle, maybe I'll get excited
4
" ... his firm would make investment decisions with environmental sustainability as a core goal."
Excellent news. And as the saying goes, this investment strategy hits polluting industries "where they live."
3
The good news is this is a step in the right direction, the bad news is we maybe past the moment of taking steps we need to make leaps. We should focus on not just fossil fuels but agriculture in terms of sustainability and a leading greenhouse contributor. Deforestation caused by clearing land for cows (as well as palm oil) is something we can address today that requires no new tech. There are fears that the amazon is reaching a tipping point where it lose moisture and turn into savanna and this is all because of demand for cows - would be a pity if we lose the amazon because we had to have cheeseburgers.
17
@Jon T I have decided not to eat any more beef until deforestation has been halted and we are actually reforesting. There is a place for cows but it can be much smaller. A few million more people doing the same would make investors in this industry consider making changes and advocate for policies around the world to reduce and eliminate deforestation.
9
BR is a leader in private equity, leverage buyouts, the wholesale looting of the middle class. Recently BR has become a major player in health care, further driving up the costs of medical care on our backs. Just another angle to loot more. fro, us. BR may be more concerned about a possible president Sanders or Warren, thus this is their attempt at more "greenwashing" from them.
10
I notice the climate change....it is world wide....as a Christian we do have to take care of the Earth our Triune God gave us....I think the USA can do better...however we are the best in comparison to large countries....I think this could also be a period in time where the climate is at an extreme...records prove this possibility....my number 1 belief the weather is changing worldwide is God is judging the people on His Earth...more and more people show disdain for God especially in developed countries...polls show it...The Word of God as printed in the Bible is the miracle of every day....the culture may be advancing...however the souls are dying...
Its easy to understand the Trump Presidency, just follow the oil from the US majors to Saudi Arabia to Russia.
While the European oil majors are investing heavily in alternative energy and power generation, Exxon Mobil, Chevron, Russia's Rossneft and Saudi Aramco are doubling down on oil. Royal Dutch Shell CEO Ben van Beurden says they are changing from an oil company to an energy transition company.
From Trump's Russian financed real estate empire to election interference, from climate change denial to environmental deregulation and tax cuts, from Cabinet appointments (Rexxon Tillerson) to Middle East policy (sending troops to Saudi Arabia), almost all can be explained by oil.
Black Rock is a $7 trillion player and their influence matters.
Consider that in your retirement portfolio.
https://www.sciencedirect.com/science/article/pii/S2211467X19300574
9
@Look Ahead
https://www.npr.org/2019/09/30/763844598/how-big-oil-of-the-past-helped-launch-the-solar-industry-of-today
The US has become the leading producer of oil, which hurts the Russian economy.
1
It is highly unremarkable that an investor would pay attention to risk of all types, and climate risk is one of those risks. Even beyond regular residential flood insurance, which tends to get the most press, there is a whole industry focused on weather and catastrophe-related risk. But there are also insurance companies -- notably commercial mutual insurance companies -- that have determined that climate risk is essentially not worth insuring, because a business would rather fold up and move elsewhere if destroyed by weather than pay the high price of insuring against that outcome, and like-minded businesses band together in insurance mutuals with that philosophy. Likewise, there is nothing "wrong" with a homeowner "investing" in a waterfront home that may be gone in 5, 10, 20, or 50 years, even without flood insurance, as long as the homeowner enjoys the house and can accept the risk of loss. It's a good thing that BlackRock pays attention to risk in its investments, and that it takes a broad view of risk, but wouldn't you expect that from an investment machine of that level of sophistication and success?
4
If people had to pay for their flood insurance from private companies, not the government, they would quickly see the impact of climate change. No insurance company would insure against flood damage for beachfront homes of the wealthy. Climate deniers can say all they want but the market will decide in this case.
30
This is just “window dressing” by Mr Fink. Blackrock needs to follow through with something more than being “increasingly disposed” to put real pressure on the fossil fuel companies in which it has invested. If they don’t also aggressively invest in eco-friendly and sustainable research and development companies, we should name, shame and protest against Blackrock, JPMorgan Chase and the cabal of financial enablers of environmental destruction.
8
An open letter to the NYT. This piece about Blackrock moving sustainabilty to central to its investing decisions is significant and exciting, but I would like the Times to do a major story on whether or not those of us with stock in fossile fuel companies such as Exxon Mobil should divest or remain as shareholders, if we want such companies to change direction and move rapidly away from fossil fuel extraction. Most of my environmental friends think divestment is the only solution. I do not. I feel like I have more influence as an insider and complainer and voter for change. I would love to hear what famous economists and financial experts think on this difficult subject, Sincerely, David Lindsay Hamden CT.
12
@David Lindsay Jr. Also, if you divest your EM shares, those shares do not evaporate. They just become owned by someone else who may be more or less attuned to sustainability. Interesting would be a movement by environmentalists to BUY MORE shares in companies like this and then DONATE those shares to the Sierra Club or the like. Indeed, BlackRock itself is in a position to do at least as much by MAKING investments in coal as by declining to do so.
3
@David Lindsay Jr. Divestment is a mistake. The Oil sector has been highly undervalued and don't believe the oil majors will cling to oil with a death grip. They will diversify and have been for past 20 years.
2
@David Lindsay Jr. Gosh, David, do you REALLY think leaving your money in Exxon is the same thing as having a voice? They will do what they want. Your best way of communicating with this company is to put your money elsewhere. DIVEST!
1
In no time at all Mr. Fink will be dead. I will be dead.
His grandchildren will be here, mine will be here -- all of them in a world we made but in which he had far more power to affect change that did not come and even now does not come to rescue the planet.
All of today's children will live and breathe harder in a world in climate chaos brought on by the denial of science that titans of finance like Fink have sustained for generations with their political strategies and political contributions.
23
@Carl Zeitz Agreed. I have one grandchild 2 1/2 years old. Lives in Pasadena. His father, my son, recently told me that I should never mention the topic of climate change in front of his mother. It makes her too depressed to think of the world her son will be growing up in. And my wife's sibling, her younger brother voted for the Sewer Rat. I have decided to limit how much time I engage with him. We spent our XMAS holidays with he and his family. My wife was there for five days, MOI? 2 1/2. My wife is very critical of that decision. I tell her that given the chance I would ask him if he could explain his action. And remind him that his young son, 12 years old and my grandson will be growing up in a ravaged climate-change world. What in god's name was he thinking? There is no rational, saner and logical answer. There is not? And the same thing goes for his misogyny and his ableism. The man is a disgrace.
2
He is saying what everyone has known for years. The real significance of his statement will be determined when we see whether investment in [e.g.] sustainable sources of energy increases dramatically, whether Republican politicians give up their devotion to short term greed, whether the corruption in the Trump cabinet with its link to the Koch family is exposed and cut off from setting American policy and whether climate deniers decrease in significance globally.
5
How about that? wakening up to the gravity of exchanging the survival of mother Earth against the immediate rewards that capitalism demands...when there is no ethics; selfishness and avarice instead? Climate Change must be tackled, and the sooner the better; besides, it may be economically attractive to do so. For that, however, a paradigm is critical. Who said we 'must' keep expanding for our financial health? The simpler our lives, the less we depend on consumption, the better. For now, we remain corrupt in acxquiring more and more, augmenting our chronic unrelieved stress...and the awful consequences of our lives 'set on fire'.
6
Human greed, the cause of and solution to all problems.
7
Most hydrocarbon investment is now sunk costs; using currently discovered hydrocarbons, especially coal, commits us to at least a 5 degree increase in global temperature and vastly greater externalities. The Saudis knew this when they internationalized Aramco; the Bear Stearns act of our cycle. It's all a high-stakes game of musical chairs now. As always the poor, and the environment, will suffer and die most.
Former DNI James Clapper crowed about how global warming meant global instability (and thus job security for the IC) for the next 100 years in his final Worldwide Threat Assessment. BlackRock is hardly a prophetic voice in the desert. Still it's good to see them making this explicit. Word to the wise.
3
I will believe Mr. Fink when I see the money moving in the direction of sustainability. Politics has alway been a large component of the investment strategy.
While there are still crumbs on the table I would expect to see Fink and his greedy gang of investors crawling around licking the table.
This sounds a lot like the rhetoric we heard before the enormous crash of 2007-2008. These are not the most intelligent guys out there. Put your money out there and then open your mouth.
3
Can we trust this is a sign of hope?
We can pray!
1
The belief in prayer is what got us into this mess in the first place. Let’s not pray, but act.
8
Buzz words. He just mean “risks” which investors always weights against returns. Climate related risk is the same as other risk and if you go back to the invention of modern joint stock company and insurance company you’d know weather related risk was one reason why the industry developed.
6
I hope the folks at Vanguard are paying attention. They have a few ESG funds but not any that are completely fossil fuel free. Yet.
3
He is an old man who will be dead long before the worst happens. So, sure, he is still worried about grabbing more wealth for people who are already wealthy.
He doesn't care at all that as the feedback loops in climate hit, there is a point where the natural sources of CO2 and methane, that are stored in various ways, are released simply due to higher temperatures and thus the process becomes a runaway process.
It may already be too late. Not that anyone cares.
4
Then don’t invest in Exxon, BP, and Shell, let’s see that happen.
7
Marx wrote explicitly what Adam Smith also understood in 1776 in The Wealth of Nations: the most important thing capitalism does is to raise capital, not to return profit to shareholders. Smith could see that real wealth, like real estate, lies not in gold or in shares or notes, but in productive assets like farms, mines, mills, canals, factories, and the infrastructure that supports them. Growth does not come from money, but from smartly investing it.
Marx saw further that while even a king might not be able to raise the capital needed, capitalism could through investment returns, but he also saw in 1848 that social disorder could disrupt growth that hurt most people while enriching the very few. To him capitalism was a necessary step to a better collective future, but a two-edged sword.
Mr. Fink is hardly a Marxist. Still, the Social Contract we accept in order to form a more perfect union means that the collective good matters as much as individual gain. We all share the environment, the air and waters and lands and biosphere. We share laws and rights within which business is done. Fink sees that in the end a better world is a profitable investment.
13
"Even if only a fraction of the science is right today, this is a much more structural, long-term crisis"
Of course the science is right! It has been for decades. We didn't get to the moon on a guess.
50
The next big thing. Trying to get out ahead of the pack and reap the rewards for our shareholders. That's how our economic system works, isn't it? The question is how much damage do we sustain before it becomes profitable to save our environment? Regardless of how things should be or should have been; glad to see this happening now.
8
Current stock market gains have resulted in the top 1% of the US income distribution making large gains in wealth because of the very high ROIs from financial, physical, and intellectual capital. Whereas, for the majority of people dependent on wages and salaries, the competition from productive machinery and cheaper international labor markets has resulted in stagnant wages for many that are so compensated.
Like Biosphere II, other similar artificially created environments could be planned that are capable of protecting, say, only the top 1% of this top 1% of very rich individuals. [Since: 0.01 x 0.01 x 330 million total US population = 33,000 people] To protect and sustain 33,000 people is a much more viable alternative than providing for 330,000,000 people, with resources, that in a worst case scenario,may become ever scarcer. As with health insurance, could millions be priced out of a habitable environment, too?
MIT is currently trying to right mistakes made in some of its endowed research programs that were funded partly by and associated with Jeffrey Epstein. My point is very simply that transparency in climate research and the financial reporting of new alternatives versus fossil fuels is critical to maintain the public's credibility in the system; especially one with such clashing financial interests.
[01/14/2020 Tues. 10:15 am Greenville NC]
8
Too little, too late...and this goes for just about any remedies at this late stage of the game. Sorry to be so pessimistic but we've had warnings about this coming catastrophe for the last 30+ yrs. Good luck thinking this drop in the ocean will alter anything in time to prevent one.
19
@Gregory Y
That must be a very cozy viewpoint: doomsayer, teller of truth. Because that way, you don’t have to do any of the hard work of trying to fight climate change.
3
@Stuart
Cozy viewpoint? Try realistic.
Not sure how you think you know how I live my life and what I do or don't do for this cause, nor I you.
Just because I feel it's a losing battle doesn't mean I don't fight.
2
Climate change is going to reshape a lot more in society than just finance.
77
“Mr. Fink insisted in an interview that the decision was strictly business. ‘We are fiduciaries,” he said. “Politics isn’t part of this.’”
Well, capitalism externalizes costs as much as possible and maximizes profits as much as possible, so what changed? Politics! That said, maybe capitalism is capable of responding to the climate crisis after all.
6
@unreceivedogma
What if Ben Bernanke, the former Fed chair and its other members, had been as veracious as possible about the dire economic conditions that prevailed during the Great Recession? Would the eventual recovery have been further delayed by such honesty leading to pessimism? The credibility of the people in the financial system and its leaders was a key factor in this recovery. Yet, such credibility was and is extremely fragile; especially as unemployment soared to over 10% during the Great Recession.
With a large portion of $7 trillion dollars at risk, Mr. Fink seems to be advocating an orderly retreat from fossil fuel stocks. I bet as a fiduciary acting as a very active investor for his clientele, they will exit early and more profitably than many other passive investors in index funds.
With oil companies owning inventories of huge reserves worth hundreds of billions of dollars, to suddenly declare these reserves a "sunk cost," with no future ROIs,would be quite costly to their stock valuations. With such huge vested interests in play, other media sources complementary and antagonistic to the financial ones are critical.
[01/14/2020 Tues. 11:23 am Greenville NC]
1
Wow, cutting-edge. Now Fink and the other billionaires can make more billions while being hailed as visionaries, after driving the climate crisis for decades.
34
“Mr. Fink insisted in an interview that the decision was strictly business. ‘We are fiduciaries,” he said. “Politics isn’t part of this.’”
Well, capitalism external uses costs as much as possible and maximizes profits as much as possible, so what changed? Politics! That said, maybe capitalism is capable of responding to the climate crisis after all.
3
This is a very revealing article about how politics may not be sustainable without attention to climate change. The evangelicals (non-scientists), have always lined up in the corner against good solid scientific ideas. Their support of a political candidate could be very detrimental in the future. Evidence continues to pile up and disastrous consequences appear that we thought were far in the future. The ole white men running our government either need to get on board or just go away. They are not the future. The real future lies in the coffers of the monied group that are feeding at the trough of trump. They need failure to convince them.
8
I'll believe it when I see it. BlackRock is in business to do one thing and one thing only: To Make Money.
I'll believe it when I see it.
13
Smart. Makes me think of those protesters in the Chase bank and their point that if we take money from banks that keep investing in oil we can have a huge impact. That was a message that resonates with me and I have no allegiance to my current bank (which I am sure is a terrible offender on this).
2
Leading from way, way behind.
14
Everyone with a modicum of sense knows what time it is. Every energy exec and cable pundit. There's a small and vocal minority of voters keeping the climate denial charade going, and that is having catastrophic consequences that will be felt for a long time.
34
@DV Oh Yeah well I look forward to the day when Atlanta is under flood waters and tornado damage so bad that the financiers can't get to the bank to get all that cash.
I think investors are terrified. They see inaction on climate change creating a political environment where investment decisions are made for them. They want to get ahead of the regulatory curve on climate change. Regulation is coming. Business wants to mitigate the terms of enforcement.
In many ways though, they are only following the consumer. Speaking as someone deeply concerned about climate change, I wouldn't feel comfortable with a stock portfolio heavy on climate destruction. Gone are the days when people pop champagne over Chevron stock dividends. BlackRock isn't selling to the Bush family anymore.
Their client is increasingly disaffected millennials. Millennials who increasingly have children. Albeit fewer children than previous generations, children all the same. I can imagine the customer service call records. What question do you think topped the FAQ list before BlackRock made this announcement? There is money to be made here.
If climate change is an industry, BlackRock is investing. They have a large constituency of concerned consumers willing to lay out trillions in both public and private funds in order to correct a growing social problem. Cha-ching $$. Why wouldn't you divest yourself from climate destruction? One option hurts your brand, the other increases sales.
Investment's future lies in convincing millennials their mutual funds are socially just. Or at least just just enough. BlackRock just took a big step in that direction.
18
"Despite recent rapid advances in technology, the science does not yet exist to replace many of today’s essential uses of hydrocarbons." The science is there; the political and financial will is not.
52
@sara
Batteries are not there yet. Cloudy and/or windless days are still a problem.
2
@Jim Consider the early automobiles and the total eclipse of the horse. Investment in autos preceded a modern highway system by just 40 years.
4
@Jim We do need to solve those problems. Let's find a way to store and export solar and wind.There was a time when the Internet didn't exist and the thought of its existence would have been deemed "magic." Nothing is impossible.
If only our administration recognized the national security threat posed by climate change, then we would be investing at a tremendous rate.
13
Definitely brave and wise, Blackrock sees and understands how reality is effecting peoples money. Thank God.
It is undeniable that the fossil fuel industry holds tremendous power to shape the world economy and structure, and that they know how people are thinking about climate change. If they thought people would stop buying fossil fuels for their energy needs, they would transfer their operations to sell us what we demand. But while that demand is growing, there are still too many people who just use the fuels that are easy to get.
This decision may begin to change that calculation, which could save us a lot of human misery. Keep working on it, everyone. Please divest, please consume sustainable energy, and vote vote vote for candidates fighting against emissions. I am.
Thank you.
10
So, Wall St. finally discovers the whole notion of "externalities" and realizes that investing in businesses that generate literally tons of negative externalities is not a wise investment strategy? Didn't any of these people take Econ. 101? Did they all get their degrees from Trump University?
20
I see so many negative comments here. While I agree that yes, Larry is unbelievably late to the party, I’m ecstatic that he decided to show up. Step by step. Better late than never. Vote with your dollars.
41
This is good news. Where people put their money matters. I personally invest with another of the large investment firms and will be calling on them to either follow BlackRock's example or lose my business. If enough of us can demand this sort of action from our retirement and investment funds, we can create a substantive change in our economy and corporate incentives. It may not solve the climate crisis, but any such difference helps.
14
Very late in the day. And talk is cheap--the proof is in the pudding. No cheering here until we see action. Watching what happens next is vital and it is important to keep nagging at these butter-wouldn't-melt-in-their-mouths investment groups so that they shake hands with reality. The rest of us have to do so.
4
Then the first industries to disinvest in are the animal flesh/egg/dairy industries. They are also atrociously cruel so disinvestment is even more compelling.
7
@Polaris What are you doing to help people see better ways to get protein?
Alas, it's too little, too late. Global wind and ocean currents are already changing, oceans are warming and ice caps are melting. The proverbial train has left the station. The free market system is infected with greed, and greed is the seed of its destruction. It's too late, too little. Alas!
24
Only one of the two ice caps is melting. Antarctica seems to be gaining mass overall.
@Mondo Man
That is not what I read especially about a major portion of Antarctica breaking off. I might be wrong and wish I am but I don't think so.
2
An article in Forbes magazine revisited that 2015 report of ice gains in Antarctica. The most recent studies show gains are not off setting ice loses.
1
well, sure, climate change. after all this time since Kyoto, and all the black swan weather events, we're still reporting on climate change as if acknowledgement of the facts is a "watershed" or "breakthrough."
this is a piddling watershed, though, if it means the passive fund, bread and butter part of blackrock remains status quo, and the targeted investments require meetings and evaluations and statements and scenarios.
where, oh where are the boards of directors of the companies who continue to slack on sustainability investments? why, they are where all the boards of directors are in modern business news: in the shadows, getting no publicity, taking no heat, and pulling the strings -- anonymous to all but themselves and their confreres in other industries.
the only way things will change is when a solid majority of the electorate realizes they are walking into a grandin chute; that it all looks fine and happy now, and we're assured that wealth and prosperity can go on forever: meanwhile, up ahead, the bolt gun of global heat.
yes, talk is changing, sure. talk among the executives and politicians, the professional talkers, the talkers in silk socks. talk about climate change is changing with the climate.
but that still makes the talk a form of weather report about the changing climate, and the talk won't change to action until the talk fully grasps the meaning of the term climate. by then, your future plans to change will be too late.
13
Wow there must finally be REAL money to be made for Blackrock to invest. Thanks rich folks for finding time to look out for the planet.
What’s the rate of return?
10
Well, oil companies don't use oil and gas - their customers do.
I'm still waiting to hear that Black Rock won't accept money from people who drive cars and heat their houses.
3
@Jonathan - Oil companies most certainly use oil and gas. Exploration, extraction, refining and processing all require energy, and that energy is fossil fuel energy. Lots of it.
A carbon tax, coupled with subsidized alternatives to carbon-intensive fuels, will address the individual use (cars and homes).
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People will stop using fossil fuel to drive their cars and heat their homes when sufficient renewable energy sources are available and that will be when investment companies start investing in RE infrastructure. It’s not that complicated
11
The first domino falls! Stop the money pipeline :)
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Thank you Mr. Frank. This announcement is long overdue and I strongly “advice “the rest of the investment banking industry follow suit before it’s too late and you’re all literally underwater
5
"While BlackRock makes its green push, the Trump administration is going in the opposite direction, repealing and weakening laws aimed at protecting the environment..."
Decent humans do NOT vote for Republicans and their Greed Over Planet-Greed Over People-Gas Oil Petroleum-Grand Old Pollution ecocide.
November 3 2020
Register and vote.
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@Socrates
In a nutshell--you said it.
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"BlackRock’s decision may give C.E.O.s license to change their own companies’ strategy and focus more on sustainability, even if doing so cuts into short-term profits."
Righto! Predatory Capitalists are suddenly going to eschew "short-term profits"? Tee hee hee. Now take a deep breath and hold it, hold it, hooold it…
Talk's cheap and we'll see how deep Fink's commitment is. Personally, I'm betting he ain't about to give up his corporate luxury jet and wedge himself into a seat with the hoi polloi in steerage as part of his new-found environmentalism.
I won't feel encouraged until I read this headline, "86% of Americans know what their Carbon Footprint and are taking active steps to slash their Fossil Fuel Addiction."
3
Could there be a Minsky Moment on the horizon where investors actually listen to the growing number of extremely worried big financiers who believe that the fossil fuel party is ending?
Larry Fink may be a blowhard, but he is speaking through a megaphone and this message has its own power. Start looking at your portfolio.
To mitigate climate change, if its still possible, a crash in this industry is probably necessary since they have done nothing.
4
Dr. Martin Luther King, Jr. warned about the dangers to preserving, protecting and protecting the Constitution of our republic arising from the evil malign confluence of capitalism, militarism and racism that has made America first in money, arms and prisoners.
Corporate law requires that the enhancenent of shareholders profitable return can be the only prime ethical obligation and directive.
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@blackmamba. There is no “law” that “requires” that. It is indeed a point of view that many take. And many public companies take a slightly different point of view. Perhaps more importantly, every hard study I’ve seen says that companies who act with something of a social conscience perform better financially.
3
This is an intelligent first step, at least. Twenty-five years from now, if not sooner, a huge percentage of economic activity will be centered on climate change in one way or another - developing alternative energy sources, repairing the horrendous damage that climate change and pollution are doing to the planet, dealing with massive migrations of populations from areas that have become too hot or dry or flooded to sustain life, and building more sustainable agriculture and fisheries and manufacturing and housing. Twenty-five years from now, when the full, horrifying impact of climate change has finally sunk in, oil company executives and their enablers may be finding themselves charged with crimes against humanity. The only surprising thing about BlackRock's announcement is that they're announcing it publicly. I would have thought it more sensible to quietly unload all their oil and gas and coal stocks before announcing that the stampede to the exit door has begun.
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As Fink points out, they are fiduciaries. Sacrificing a little short-term monetary gain for long-term sustainability is noble. However, when there is large short-term monetary loss (even in pursuit of long term goals), the retired teacher depending on that income today will suffer and of course there will be lawsuits. And if there is not short term monetary pain, then it will have necessarily been a greenwashing exercise.
1
CEOs of the fossil fuel industry, do not worry, the letter said: “Under any scenario, the energy transition will still take decades.”
This is PR. Nothing else.
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How sad that this is actually newsworthy. Doing the right thing for society, the environment and wildlife has somehow become seen as altruism. Only more money or the loss of money has any impact on black rocks behavior. This is why sanders and warren are winning.
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The answer to climate change is right in front of us.
Nuclear power can produce the huge amounts of carbon free electricity which can be used to electrify transportation, convert residential heating to electricity, desalinate water, produce hydrogen, and raise living standards.
Yes, there are problems, but they are manageable. Climate change is the biggest existential threat.
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@Jack Ludwig solar, wind, and hydroelectric all offer tremendous potential without the “problems” of nuclear (the need to sequester spent fuel for thousands of years). Let’s not jump out of the frying pan into the fire.
1
@Jean Sims
You do not seem to understand that climate change is the fire and nuclear power plants can be safe. Intelligent people learn from past mistakes (i.e. those made in older nuclear plants).
2
This time it is different how? A business has to be economically sustainable, not environmentally
The activist investors forget that the US has exceeded the Kyoto Accords and we didn't sign them. While our "friends" have not hit their marks. Germany feared nuclear energy and went back to coal. Rotterdam mandated EVs but failed to realize electrical production from coal was needed negating the benefits of no emission cars
I do not oppose the use of either fossil fuels or non-fossil fuels. I want reliable, reasonably affordable energy. Most activist want us to go cold turkey on cheap fossil fuels, while also wanting out of the Middle East and complaining about a 300ft wide powerline right of way out of the desert for a solar plant or that a windmill blocks their view of a mountain or the ocean.
The US has the cheapest energy in the world (one of our greatest economic advantages). This give us the ability to eventually turn the ME over to the EU to care about (they won't) This also give us the ability to convert to more clean and sustainable energy on a very affordable transition. Old coal energy is cheaper than new solar energy, but new solar is cheaper than new coal plants.
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@Spencer Hill
You may wish to learn more about RENEWABLE NATURAL GAS (RNG) from organic waste.
(Animal and food waste put 30% of the methane into our air per USDA.) The process of making RNG removes methane from organic waste.
Fink should lead Americans to invest in RENEWABLE NATURAL GAS (RNG) from organic waste. The world can replace the need for fossil fuels and fracked gas with RNG and other renewables.
RNG can do everything fracked gas does: What are we going to fuel all those electric vehicles with? RNG along with solar, wind, geo-thermal and other renewables can help save the US from climate suicide. RNG just needs to scale up. CLNE and WM (clean energy fuels and waste mgmt already know its benefits.) Blackrock needs to invest in RNG right now. The planet can't wait.
2
Now if we could only get them to understand that income inequality is likewise unsustainable.
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It's high time for Blackrock to step up. The capital reallocation that's coming down the pike and its consequences will bring unprecedented change. Everyone must prepare and participate -- if for no other reason than to not get left behind. Consumers, investors, employees take note.
2
Let's celebrate this move, any movement towards 100 percent sustainability, while pointing out that this is not true: “Despite recent rapid advances in technology, the science does not yet exist to replace many of today’s essential uses of hydrocarbons."
The science does exist. A more accurate statement is that to replace all of fossil fuels would be expensive. It is also true, it will be even more expensive to support fossil fuels in any capacity. For heaven sake, an entire continent is on fire right now.
We could if we wanted too; we could if we understood our survival depends on it.
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@JJ Flowers
Kudos to you and BlackRock and Laurence D. Fink.
You may wish to learn more about RENEWABLE NATURAL GAS (RNG) from organic waste.
(Animal and food waste put 30% of the methane into our air per USDA.) The process of making RNG removes methane from organic waste.
Fink should lead Americans to invest in RENEWABLE NATURAL GAS (RNG) from organic waste. The world can replace the need for fossil fuels and fracked gas with RNG and other renewables.
RNG can do everything fracked gas does: What are we going to fuel all those electric vehicles with? RNG along with solar, wind, geo-thermal and other renewables can help save the US from climate suicide. RNG just needs to scale up. CLNE and WM (clean energy fuels and waste mgmt already know its benefits.) Blackrock needs to invest in RNG right now. The planet can't wait.
2
From the article, "While BlackRock makes its green push, the Trump administration is going in the opposite direction, repealing and weakening laws aimed at protecting the environment and promoting sustainability. Indeed, Mr. Fink’s effort appeared to be another example of the private sector pressing on issues that the White House has abandoned." We cannot go back in time, "better late than never" is the best we have for timeliness at the moment. If the investment community would throw its weight behind this effort change will happen, even with a broken government.
15
I am a middle class Gen X'r that has been investing for 30 years in socially and environmentally conscious investments through several firms - Green Century Funds, Domini and Calvert. I have had solid ROI performance while having my money work for a more sustainable and just future. I guess all I can say it's about time bigger players show up to the table on putting their money where it matters long term and not just for short term portfolio gains. The language from Blackrock still seems pretty wishy washy, but I'm hopeful this is a part of a larger trend toward caring about the planet and people over just plundering them.
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@BikePedGirl
Thank you - yes, we should all look at our 401k's and choose the least bad options. There are some really good online articles on how and what to choose. Thanks for the names of the firms above.
3
Contrary to the measured words Mr. Fink is using here, for firms like BlackRock, there is nothing abstract about climate change. When insurance companies are paying out hundreds of billions of dollars in claims every year, that's money BlackRock is no longer managing. Market instability, either caused by the rise of populism, shifts in technology or the environment costs institutional investors big dollars because corporations will sit on their cash, rather than invest it.
This is pragmatism at its best.
6
An important step: the rest of the business and financial world needs to abandon a business model that sees climate devastation as cost free
18
“Despite recent rapid advances in technology, the science does not yet exist to replace many of today’s essential uses of hydrocarbons,”
The science exists, what’s needed is to scale up our solutions. Put your money there Mr. Fink, it’s a good investment.
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@Alden
Yes, that also struck me as saying “Don’t expect us to get rid of stuff we’re making good money on.”
Same with the index funds. But we’ll see.
3
@Alden There are plenty of good solutions for reduction of hydrocarbons. Most of them have already been implemented in Europe and other places. My Italian monthy energy bill includes an estimate of the amount of sustainable energy consumed. Last month, it was around 42%. The UK has an even higher consumption of sustainables.
2
@Alden There are few plant based oils that can take the high pressures of mineral oils. Heavy equipment still needs them. The feed stocks for a lot of polymers is still fossil based Hydrocarbons, Those don't get burnt so would still have applications even in an All renewable energy economy. It's the burning of hydrocarbons that is the biggest issue. Not all the uses of them.
Until we learn to better take care of our soils in a whole system approach we will have wasted our time trying to live without the help that Hydrocarbons and their other uses have given us. Lots of work left to do out there, we could have a global higher standard of living than we do now.
1
This is a big deal folks. BlackRock is huge with trillions of dollars in investments around the world. Climate change is the social responsibility of all companies and as the largest fund, BlackRock has big sway. This really does sound the alarm bells in the investment community. But is it too late?
135
Better late than never I suppose. But how will this investment be leveraged, and just what shape will it take? And who will benefit? Probably not those who stand to lose the most.
9
As conscientious consumers and investors we must put our money where our mouths are. Besides BlackRock, JPMorgan Chase -- our bank -- invests billions in fossil-fuel companies. Same with other big banks such as Wells Fargo, Citibank, and Bank of America. (See how your bank is doing in Rainforest Action Network's report.) Guess what? My wife and I are shopping for a new bank. If we walk, they'll do more than talk.
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@Larry Yates
JP Morgan Chase is amongst the worst in terms of fossil fuel investments. I just realized that and will cancel my credit cards with them. The more of us that walk, the better.
5
@Larry Yates
Likewise, I'm shopping for a new bank to get out of Wells Fargo (probably a local credit union). I would love to see a "National Day of Divestment" or some such thing in which all of us who are considering this can do so at once, sending the clearest message possible that we'll no longer passively cooperate with climate destruction.
4
You believe him? Don't. They'll find a way to look like they're doing the right thing, but are just raking in the cash while at the same time getting positive press. A lot of bunk.
11
@Joanna Stelling I know what you mean. But Blackrock can't pull this off alone. They need support from consumers, other investors and governments (that means us - also as voters). This is a reallocation that no one dares doing on their own.
2
Larry Fink’s long-overdue recognition that climate change poses risks to investors and, indeed, entire industries is welcome. But BlackRock has a truly awful record of using its power as a shareholder to push corporate managers to disclose their environmental impacts and take steps to minimize them. It consistently votes with management and against shareholder resolutions that challenge business-as-usual corporate practices.
The trouble is, BlackRock is deeply conflicted. It manages money for big companies and their top executives, and thus is reluctant to vote against management in proxy battles over climate, CEO pay, corporate governance, etc. It’s easy to write a letter designed to win praise from those who are not paying close attention. Those who are watching closely know that - so far - see that BlackRock’s action does not match Fink’s rhetoric.
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@Marc Gunther
It's a really good point - what's their position on executive compensation and income inequality, lol! That'll be the day...when someone like Me. Fink extolls the virtues of CEOs not looting their companies regardless of performance.
3
Kudos to BlackRock! The truth is that only through intense cooperation with private businesses will we ever put a dent in climate change. If there is a profit motive (particularly through a cap-and-trade system), even better.
9
I’m glad Mr Fink appears to be moving in the right direction. But... what great paradox bends the universe to enable a minority - to deny the facts, science, and moral imperatives so clear to the majority.
I had once learned the constitution was designed to protect a minority from the tyranny of a majority. It seems to be failing.
12
It's all coming too late.
Many climatologists are unwilling to say publicly what they believe privately: given record global greenhouse gas emissions in 2019 and the almost undetectable effort made so far, it is far too late to stop a total cataclysm now. Even if we zeroed emissions today it is likely feedbacks such as an increasingly negative artic oscillation index and melting permafrost and destabilized methane hydrates in the sea that are already releasing large amounts of methane into the atmosphere will continue to push us into a new steady state, one perhaps 5°C higher than the pre-industrial baseline.
That's not even accounting for the fact that the Amazon rainforest has itself likely reached the tipping point and, unable to sustain its own moisture content, will convert spontaneously to savanna.
All people do is talk because they think someone else will suffer the consequences, but anyone under 50 who lives a normal life span is going to see radical climate change and the accompanying crumbling of our technological civilization as associated economic costs soar far beyond our ability to cope.
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Those consequences may be accurate (what’s your source?) however important to note that any action we take is critical. If cataclysmic climate change is inevitable, so be it, but the work we do today to reduce our carbon footprint and adapt *will* save lives and maybe our species. Even if that is in a century. We can’t stop trying to revolutionize our economy in the face of near certain failure to hold change at 2 degrees C. You must mention that with the doom and gloom, otherwise your take is missing a big point.
25
@John Humans are not willing or just incapable of reading and understanding the future even when it's in plain sight. Reaction instead of action will be a cataclysmic downfall for so many of our kind who go about their daily lives while not paying attention.
12
@John
Maybe it's too late, like you say, to save the world. But things like this can actually have some sway, and it gives me hope. I, for one, would rather buy some time on this earth than not, and to make that time as high quality as possible.
17
The action by BlackRock underscores that the Administration’s contention that actions to mitigate climate change are incompatible with economic growth are a fallacy.
The Administration supports the fossil fuel industry because the industry’s dollars fuel in large part the Republican Party and the think tanks, research organizations, ad media mouthpieces that turn out climate denial propaganda as well as the rest of the rightwing agenda.
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It’s called risk management! Impacts have costs and those costs are increasing as is their likelihood & perhaps the timeframe for those cost impacts is also shortening so we can no longer pretend they don’t exist by pushing them into the future. EG -the Council in Italy that decided to do do nothing about climate, also as NYT reported, soon thereafter their chambers were flooded!
5
Blackrock sees the writing on the wall — from the coming millennial investors to the real necessity to keep fossil fuels in the ground if we want to have a livable planet. This is, however, too little to late. Blackrock, for example, was one of the main investors in the Marcellus Shale gas play and, judging from this article, they have no real intention to clear their books of all fossil fuel companies. They are hedging, making sure they keep some fossil fuels on the books. But this sort of hedge doesn’t make sense as returns from fossil fuels mean little on a burning planet. Hopefully Blackrock and other investors take more aggressive action that actually begins to devalue fossil fuel reserves and open the way to a livable future. My bet however is that the investors will be dragged kicking and screaming to this point by the concerted action of mass movements in the streets.
58
A good start BlackRock. Since the love of money is the root cause of climate denial, not even a climate-denying President and his cronies will be able to override the "market" revolution in clean energy that is about to unfold.
149
The goal is to make good investments. A business that is not environmentally sustainable is not a good investment.
200
Respectfully, a good investment is one that is economically sustainable. Right or wrong, there is currently a space that exists for activist investment strategies which can be applied to a number of desired outcomes which extend beyond strictly monetary returns. However, this may not be palatable to all investors. Not everyone has a desire for their investment dollars to be utilized to further any number of unfounded agendas. Most simply want financial security for their future.
As such, individuals contemplating allocation of private capital should not face radical changes in long term investment strategies (in addition to narrowing alternatives) in order to placate various interest groups. The continual emphasis on the intangible effects that these special interest groups promote as a certainty, and the extent at which institutional investors are weighing these risks is concerning to the overall health of the financial industry.
2
@TG I can read the words in this comment but they do not make sense. Substitute insurance companies for fossil fuel companies. Wouldn't you want an insurance company to pay attention to sea level rise or, to a point, fire hazard, in setting rates? Or an investment company to evaluate that company based on its failure to do so? These seem a bit more than 'intangible effects' and their occurrence predicted by science that is not defined by fringe probabilities. This writer seems to say, it's only a matter of jacking up rates forever to keep profit and all is good.
Lastly there is the question of ethics, and you don't have to subscribe whole cloth to human caused climate change data to be intelligent about risk and mitigation, or to look for a middle ground of some balance between personal profit and awareness of the cost to other species in this transition to the anthropocene.
25
@TG
I trust I misread your comment. A person in a country currently levelled by fire asserts economic sustainability without concern for the environment?
Humanity remains addicted to greed and old measures that support losing causes over the long term such as economic sustainability.
Wealth without a planet is hollow. Ancient wisdom asserts this: joy is not sourced in objects.
We seek freedom, joy thinking it comes in money, or property or stuff. When obtained, we only want more because the unconscious conditioning never thinks it has enough; always wants more.
One reason why humanity is where it is: on a burning platform, flames licking our heels, pockets stuffed (for a few) with money.
23