Larry Fink is telling companies to prepare for a zero-emission world. The CEO of BlackRock, the world’s largest asset manager, told CEOs of his portfolio to outline their plans to reach net carbon emissions by 2050 and that his board of trustees administration has reviewed the plans.
“No company whose business model will not be 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 necessary to keep global warming well below 2ºC, ”Fink wrote in his annual letter to CEOs on Tuesday.
BlackRock last year made waves when it said it would place environmental sustainability at the center of its investment strategy, including the divestment of fossil fuel producers. The Blackrock movement, with a portfolio of more than $ 7 trillion, is effectively pressuring other financial companies to increase their own climate commitments, according to environmentalists.
“The signal is increasingly undeniable for the boardroom that traditional finance really views climate risk as a financial risk, and it’s up to them to create and disseminate credible transition plans,” said Ben Ratner, senior director of EDF + Business, an association between the Defense Funds and companies that are committed to decarbonising.
Hundreds of companies and dozens of countries have pledged to reduce their carbon emissions to zero by the middle of the century. Few, if any, have achieved this goal. Alphabet’s Google unit, for example, announced in September that it had eliminated all of its contribution to climate change through carbon offsets, a technique in which companies pay for carbon reduction projects, such as planting trees. or catching gas leaks, to help counteract the greenhouse. gases that they themselves emit.
Ratner said BlackRock’s call for specific plans could prompt companies to disclose details they have so far avoided disclosing.
“While there has been a positive wave of zero net commitments … in many cases there are still no details on plans to achieve it,” he said.
It’s hard for lay people to distinguish between a company that really reduces their emissions and one that simply has good marketing, Ratner added. “The file [sustainable] the investment landscape today is a bit wild west, ”he said.
The same BlackRock has been called: the company still owns coal-producing shares worth $ 85 billion, thanks to a loophole in its climate commitment, The Guardian recently reported. He has also been accused of fueling deforestation in the Amazon through his investments in companies developing businesses in Brazil’s most threatened natural resource.
Meanwhile, activists have adopted divestment as a way to thwart environmentally destructive projects, with famed 350.org founder Bill McKibben writing that “money is the oxygen on which the fire of warming burns. global “. Universities and public pension funds have followed suit, and two New York public pension funds withdrew this week to withdraw investments in fossil fuels.
No less powerful than the Federal Reserve has recognized the dangers of climate change, last year it designated it as a systemic risk and joined a network of global regulators dedicated to research and policy response.
Continuing the descent
U.S. carbon emissions fell an unprecedented 10% last year, the biggest drop since World War II, reflecting a highly unusual spring when industry and traffic stop under maintenance orders in house all over the country. To prevent the worst effects of climate change, which has contributed to hundreds of thousands of deaths and caused damage worth billions of dollars, emissions would have to be reduced by approximately this dramatic amount each year until 2050, while avoiding economic impacts. and negative social blockages.
For Fink of BlackRock, the response to the coronavirus pandemic creates a possible model of climate action.
“The pandemic has presented such a great existential crisis that it reminds us of our fragility, which has driven us to face more strongly the global threat of climate change and to consider how, like the pandemic, it will alter our lives,” Fink wrote. . “It has reminded us how major crises, whether medical or environmental, demand a global and ambitious response.”
In other words, decisive action by governments is needed. Many nations, especially in Europe, have pledged to meet the challenge of linking economic recovery funds to environmental measures, while U.S. activists pushing the newly inaugurated Biden administration will advance aggressively on the climate.
“It’s great to think that even Wall Street can help create decarbonization on its own,” Ratner said. “Climate change is such a big problem that it requires governments, corporations and communities to row together.”