Larry Fink tells companies to prepare for a world without emissions. The CEO of BlackRock, the world’s largest asset manager, told CEOs of its portfolio companies to outline their plans to achieve net zero emissions by 2050 and show that their board of directors has revised the plans.
“ There is no company whose business model will not be profoundly affected by the transition to a net zero economy – one that by 2050 does not emit more carbon dioxide than it removes from the atmosphere, the scientifically established threshold needed to reduce global warming. to keep the earth good. below 2 ° C, ‘Fink wrote in his annual letter to CEOs on Tuesday.
BlackRock caused a furore last year when it said it would put environmental sustainability at the center of its investment strategy, including divesting fossil fuel producers. Blackrock’s move, with a portfolio of more than $ 7 trillion, is effectively pressuring other financial institutions to increase their own climate commitments, according to environmental advocates.
“The signal is becoming unmistakable to the boardroom that mainstream finance sees climate risk as a real financial risk, and their job is to create and disclose credible transition plans,” said Ben Ratner, senior director of EDF + Business, a partnership between the Defense fund and companies that promise to go low carbon.
Hundreds of companies and dozens of countries have pledged to reduce their CO2 emissions to zero by the middle of the century. Few have achieved that goal. For example, Alphabet’s Google unit announced in September that it has eliminated its full contribution to climate change through carbon offsets – a technique where companies pay for carbon-reducing projects, such as planting trees or capturing gas leaks, to help combat the greenhouse. gases they emit themselves.
Ratner said BlackRock’s call for specific plans could prompt companies to reveal details they have avoided so far.
“Even though there is a positive tidal wave of net zero pledges… in many cases, details are not yet known about plans to achieve that,” he said.
It’s hard for laymen to differentiate between a company that is really reducing its emissions and one that just has good marketing, Ratner added. “The [sustainable] The investment landscape is a bit of a wild west these days, ”he said.
BlackRock itself has been sued: The company still owns $ 85 billion in coal-producing stock, thanks to a loophole in the climate pledge, the Guardian recently reported. It has also been blamed for fueling deforestation in the Amazon through its investments in companies doing business in Brazil’s most endangered natural resource.
Meanwhile, activists have embraced divestment as a way to thwart environmentally destructive projects, with 350.org founder Bill McKibben famously writing that “money is the oxygen that burns the fires of global warming.” Universities and public pension funds have followed suit, with two public pension funds in New York City deciding this week to withdraw investments in fossil fuels.
None other than the Federal Reserve has recognized the dangers of climate change, labeled it a systemic risk last year and joined a network of global regulators engaged in research and policy response.
Continue the drop
US carbon emissions fell by an unprecedented 10% last year, the biggest drop since World War II, due to a highly unusual spring when industry and transportation came to a halt due to nationwide orders for stay-at-home orders. To avoid the worst effects of climate change, which has contributed to hundreds of thousands of deaths and billions of dollars in damage, by about that dramatic amount every year by 2050 – while avoiding the negative economic and social consequences of lockdowns.
For BlackRock’s Fink, the response to the coronavirus pandemic creates a potential model for climate action.
The pandemic has created such an existential crisis – such a strong reminder of our vulnerability – that it has prompted us to more vigorously face the global threat of climate change and consider how, like the pandemic, it will affect our lives. change ‘, Fink wrote. “It has reminded us how the greatest crises, be they medical or environmental, require a global and ambitious response.”
In other words, decisive government action is needed. Many countries, especially in Europe, have pledged to meet the challenge of linking economic recovery funds to environmental action, while activists in the US to push the newly inaugurated Biden government will deal aggressively with the climate.
“It is a fantasy to think that even Wall Street can help decarbonise on its own,” Ratner said. “Climate change is such a big problem that governments and businesses and communities must all root together.”