BlackRock's Fink Urges Companies to Disclose, Do More on Greenhouse-Gas Emissions

By Dawn Lim 

BlackRock Inc. Chief Executive Larry Fink asked companies to disclose more information on how they were moving to reduce greenhouse-gas emissions, stepping up the company's environmental efforts from a few years ago.

Mr. Fink said he was focused on the issue because of the risk climate change poses on investor returns, as well as potential policy pressures. He urged companies to make clear how they were preparing for a global regime focused on "net zero" goals to emit no more carbon dioxide than it removes from the atmosphere by 2050, a priority in line with the Paris climate accord.

One of President Biden's first acts in office was getting the U.S. to rejoin the climate accord, signaling the administration's heightened focus on companies' carbon footprint. Some regulators said that climate risks's effects on the financial system need to be better understood.

"Better sustainability disclosures are in companies' as well as investors' own interests," Mr. Fink said in a letter released to chief executives of companies Tuesday. "I urge companies to move quickly to issue them rather than waiting for regulators to impose them."

The company told clients it would flag companies that posed significant climate risk for potential selling from its actively-managed portfolios. It also planned to publish the proportion of its assets "aligned to net zero" and goals on that metric going forward.

Best known for funds that trade on exchanges and mirror markets, BlackRock is the world's largest money manager with $8.7 trillion in assets. The firm has a high profile perch as a corporate watchdog, but BlackRock can't just sell out of specific companies at will when investors task it to track indexes. It has to turn to other ways to nudge companies.

Mr. Fink's letter is one way for BlackRock to try to amplify its voice as a shareholder for companies the firm's funds invest in.

He has become a flagbearer of the idea that companies can't sustain profits unless they can account for the needs of workers, the public and society at large. The idea is now a popular mantra. In a sign of the times, business leaders are increasingly emboldened to use their perch atop major companies to weigh in on social issues.

Some companies have complained Mr. Fink is overreaching and sermonizing.

BlackRock attracted criticism from environmental advocates who want BlackRock to go further to advance green causes. The company has been criticized by activists for being soft on management and not supporting enough shareholder proposals that could spur change. In late 2020, BlackRock signaled it would be more willing to consider voting in favor of shareholder proposals that address material business risks.

"No issue ranks higher than climate change on our clients' lists of priorities. They ask us about it nearly every day," Mr. Fink said in his letter this week.

Each year, Mr. Fink writes a letter to other chief executives, often timed to go public around World Economic Forum annual gatherings.

The letters dovetail with a business priority: building its brand around encouraging more corporate disclosure on environmental and social issues. The company has been expanding its line up of funds branded around sustainability and aggressively looking to capture market share in a lucrative, growing part of the investment industry. BlackRock aims to grow the roughly $200 billion it manages today in sustainability-themed strategies to $1 trillion by 2030. It's been adding to technology capabilities to help clients assess investment risks from climate change.

Mr. Fink said the coronavirus pandemic presented an existential crisis that would prompt more to consider how climate change would alter lives. A world energy transition that protects livelihoods "can only be accomplished with leadership, coordination, and support at every level of government, working in partnership with the private sector to maximize prosperity," Mr. Fink added.

(END) Dow Jones Newswires

January 26, 2021 09:31 ET (14:31 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.