BlackRock Chief Executive Larry Fink has issued his latest edict to companies — disclose a plan on limiting global warming or face divestiture.
That is according to the firm’s annual shareholder letter. Fink wants companies to disclose how their business model will be compatible with limiting global warming to no more than 2 degrees Celsius above preindustrial averages, and eliminating net greenhouse gas emissions by 2050.
“Investors cannot prepare their portfolios for this transition unless they understand how each and every company is prepared both for the physical threats of climate change and the global economy’s transition to net zero. They are asking managers like BlackRock to accelerate our data and analysis capabilities in this area — and we are committed to meeting their needs,” said Fink.
wants these plans incorporated into long-term strategies and reviewed by the board. For BlackRock’s actively managed funds, there will be a “heightened-scrutiny model” for climate risk that includes flagging holdings for “potential exit.”
It is worth pointing out that active funds represented just over a quarter of BlackRock’s $8.7 trillion in assets under management at the end of 2020. Most of its assets are in either index funds or exchange-traded funds that track various benchmarks.