The world’s largest private asset manager, BlackRock has said it has punished 53 companies for climate inaction in its portfolio, including some of the world’s largest companies.
BlackRock issued a stern and public warning to oil companies like ExxonMobil, Mercedes-Benz parent-company Daimler, as well as energy suppliers like the Peabody Energy and Fortum companies.
The New-York based asset manager has said that 244 companies are officially “on watch”, while taking voting action against the boards of 53 companies, citing their complacency of environmental risks.
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For the unfamiliar, BlackRock, according to its website, has more than $7.43 trillion under its management. You can read the firm’s official executive summary of its sustainability report here.
In the report, BlackRock states that “our approach on climate issues, in particular, is to focus our efforts on sectors and companies where climate change poses the greatest material risk to our clients’ investments.”
“Voting is how we hold companies accountable when they fall short of our expectations,” the report continues to explain. “Our voting actions typically take the form of either votes against company directors or support for shareholder proposals.”
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We reported earlier this year on BlackRock’s CEO, Larry Fink issuing a letter to investors detailing the firm’s “fundamental reshaping of finance,” which placed more emphasis on sustainability and called on large companies to ditch environmentally damaging practices in their supply chain.
“In 2020, we identified 244 companies that are making insufficient progress integrating climate risk into their business models or disclosures,” BlackRock continued to explain. “Of these companies, we took voting action against 53, or 22%.”
BlackRock has said to the remaining 191 companies that they also “risk voting action in 2021 if they do not make substantial progress in terms of incorporating environmental risks into their business plans and shareholder disclosures.
In respect to carbon-intensive operations, BlackRock says that “these companies face material finance risks in the transition to a low-carbon economy that we need to understand as long-term investors.”
In his aforementioned letter to investors earlier this year, Larry Fink wrote that “even if only a fraction of the projected impacts is realised, this is a much more structural, long-term crisis… companies, investors, and governments must prepare for a significant reallocation of capital.”