Wednesday 13 January 2021 5:00 am

Blackrock still invests in $85bn worth of coal assets despite sustainability pledge

It is almost a year since Blackrock’s chief executive warned about the climate crisis, but new research reveals that $85bn worth of its managed assets remain exposed to the coal sector. 

In his annual letter to CEOs last year, Larry Fink said climate change had become a “defining factor in companies’ long-term prospects… I believe we are on the edge of a fundamental reshaping of finance.” 

Last month the $17 trillion asset manager doubled down on its commitment to climate change by committing to backing more investor resolutions relating to climate change. But this has come under fire from campaigners who claim Blackrock is still investing in unsustainable assets. 

A joint report by NGOs Reclaim Finance and Urgewald published today reveals that Blackrock’s coal policy covers just 17 per cent of the coal industry and applies to less than one third of Blackrock’s total assets under management. 

More damningly investments in coal companies that have expansion plans, such as Sumitomo or Kepco are over $24bn. 

“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing. If he really wants Blackrock to be a climate leader instead of a climate pariah, he needs to start aligning green words with green deeds, and direct Blackrock’s awesome financial power towards a sustainable future,” said Lara Cuvelier, sustainable investment campaigner at Reclaim Finance. 

Its coal policy does not apply to index funds or ETFs, which account for more than $5 trillion of the $7.8 trillion Blackrock is managing. 

A spokesperson for the asset manager told City A.M.: “Among the many initiatives to help our clients navigate this risk, we have both achieved 100% ESG integration in our active strategies and, where we have discretion in these strategies, completed the exclusion of equity and bond holdings in companies generating more than 25% of revenues from thermal coal production.” 

Investors are ramping up the pressure on asset managers to look carefully at climate policies, with HSBC the latest target from shareholders. On Monday 15 institutional investors and 117 individual investors backed a shareholder resolution calling for the bank to set clear targets in how to reduce financing for fossil fuel companies. 

On Tuesday the Investor Forum, which engages with companies over ESG, also backed calls for an annual vote on how companies plan to tackle the climate crisis.