BlackRock (BLK), the world’s largest money manager, has been accused of “greenwashing” its investment activities in a report that claims the company has as much as $85bn (£62.1bn) invested in coal.
NGOs Reclaim Finance and Urgewald published a report on Wednesday that said BlackRock has $85bn of money invested in companies on the Global Coal Exit List. The list, compiled by German group Urgewald, details companies around the world that have some sort of exposure to the coal industry.
The report’s findings come a year after BlackRock chief executive and chairman Larry Fink wrote to clients saying sustainability would be the firm’s “new standard for investing.”
“There is no denying the direction we are heading,” Fink wrote in his annual letter. “Every government, company, and shareholder must confront climate change.”
Since then, BlackRock has ditched all its actively managed investments in companies that make more than 25% of their money from coal and added a raft of new “ESG” (environmental, social, and governance) fund options for clients to invest in. Investments in “sustainable” assets are up 41% on 2020, BlackRock says, and the company has pressed hundreds of companies to come up with green plans for the future.
However, Reclaim Finance and Urgewald said BlackRock wasn’t going far enough or fast enough. Lara Cuvelier, a sustainable investment campaigner at Reclaim Finance, said Fink’s letter amounted to “greenwashing” — the process of falsely making business seem more environmentally friendly than they really are.
“One year on, it’s hard to see Larry Fink’s sustainability commitment as anything other than greenwashing,” Cuvelier said in a statement.
“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.
“After the hottest year on record, the bare minimum for BlackRock is to get out of coal once and for all.”
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Coal, when used as a fossil fuel, is one of the biggest contributors to climate change. BlackRock publicly pledged to stop investing in companies involved in thermal coal — one of the most polluting forms of coal — but critics say exclusions from the policy mean it captures only a fraction of the industry. Coal-fired power plants are exempt from the investment ban, for example. Reclaim Finance and Urgewald’s report estimates the ban covers just 17% of the coal industry.
“In order to effectively exclude the coal industry, BlackRock should drop all companies that are planning to expand existing or build new coal infrastructure,” said Katrin Ganswindt, finance campaigner at Urgewald.
“At the very least, companies with a coal share of revenue of 20% and a coal share of power production of 20% should be excluded from BlackRock's portfolios. Lastly, BlackRock needs to define a concrete phase-out date for all coal investments.”
BlackRock is the world’s largest money manager, with more than $7tn under management. About two thirds of that is managed through passive tracker funds, limiting BlackRock’s ability to sell-out based on climate criteria.
“Our conviction is that climate risk is investment risk,” BlackRock said in a statement. “We ask all companies to disclose how their business model will be compatible with the transition to a low-carbon economy. Where we do not see sufficient progress, we take voting action.”
BlackRock pointed to recent votes against firms like PGE, Uniper, and Fortum. A recent climate update said 244 “climate intensive” firms were at risk of BlackRock voting against them unless they made “significant progress on climate”.
Finance firms are facing increasing pressure from campaign groups over investments in polluting industries. Barclays (BARC.L) faced a successful pressure campaign from climate groups last year and activist organisation ShareAction recently launched a similar campaign against HSBC (HSBA.L).
A report by Morningstar in October found BlackRock voted against investor climate resolutions in 80% of case last year.
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